Uphill struggle for traders as good news hard to find

Mickey Clark
26 Mar 2009

City traders and fund managers face an uphill battle over the next few days to put a gloss on things before the final quarter draws to a close.

That is when they will begin the task of assessing and justifying their performances to clients. It's not just bonuses at stake this time but also the ability to hold on to those cherished clients and their cash, who may now choose to switch their money elsewhere in the search for better value.

Most traders will be looking to embark on a spot of window-dressing between now and next Tuesday, by chasing the stock market up to around 4000. But it could turn out to be hard work, with good news remaining thin on the ground.

Shares were able to gain some ground today, supported by a positive if somewhat erratic performance on Wall Street overnight and gains in Asia this morning. The FTSE 100 rose 20.89 points to 3921.14. But that compares with the benchmark index's 4434.2 at the start of the year.

Mining shares supported the charge with Eurasian Natural Resources adding 18½p at 229p following some positive comments from Bank of America Merrill Lynch. The broker has raised its rating from neutral to buy and jacked up its target from 400p to 700p. It says the outlook for chrome, ENRC's main product, is clearly depressed but now largely discounted in the share price.

Other miners to go better included Kazakhmys, up 14¾p at 378p, and Xstrata, 16p dearer at 476½p.

On the junior Plus market, directors of Rivington Street Holdings have been forced to rush out a statement saying they know of no reason for the recent fall in its share price, other than a small number of share sales. They added that the company is currently trading profitably with "strong" cash balances. The shares were today at 27½p, having dropped from 37½p since last week.

Share prices on Wall Street set a blistering pace in early trading yesterday, cheered by further positive news from the housing sector. This showed a dramatic increase in mortgage applications granted, which resulted in a pick-up in new house sales.

Confidence was also bolstered by an unexpected jump in durable goods orders. But the best levels for shares were not always held and the Dow Jones closed up 89.84 points at 7749.81 after being almost 200 points higher earlier in the session.

The retreat was mainly due to a reversal of fortune on the bond market, where the government was having a lean time of it. An auction of $34 billion (£23.2 billion) of five-year Treasury bonds failed to attract much demand, and that was reflected in the rest of the bond market, which also gave up ground.

A late surge by financials carried the rest of the market higher and enabled investors to walk away from the session with a profit. Builders were marked higher on the back of that news on new house sales. DR Horton rose almost 10% to $4.50 while KB Home put on 4% at $13.38. Commercial property broker CB Richard Ellis jumped 64% to $4.92 after lenders agreed to relax their covenants on the company's debt.

Tokyo blue-chips rose almost 2% to hit a 2½-month closing high as exporters such as Sony gained after the unexpectedly strong US economic data sparked hopes for an economic recovery.

The Nikkei 225 Average ended up 156.34 points at 8636.33, its highest close since 9 January.

It was a similar story in Hong Kong, where ICBC paved the way for a rally as Chinese bank stocks jumped following a strong showing from the country's top lender.

Shares in Industrial & Commercial Bank of China hit an 11-week high after its forecast-matching 2008 earnings results and an extension in the lock-up period for most of its shares owned by Goldman Sachs. The Hang Seng index closed 486.87 points higher at 14,108.98.