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Shares of Petrofac looked to be rounding off the week on a high note with the shares trading at record highs.
They edged 4p higher to 914½p, stretching its two-day lead to almost 9.5% as institutional investors and tracker funds continued to chase the shares.
Only yesterday it was announced that the oil industry services group was to be included in the influential MSCI Global Growth Index. That forced the trackers to rush and top-up their weightings. Now two brokers have also joined Petrofac's fan club. Bank of American Merrill Lynch has hiked its target price for the shares from 770p to 885p, while rival RBS has repeated its buy rating and jacked-up its target by 200p to 930p.
Last week, UBS raised its rating from neutral to buy and target from 610p to 1000p. It also began raising its earnings forecasts from next year onwards on the back of new contract bids.
RBS has also raised the target for John Wood Group, one of Petrofac's biggest rivals, from 200p to 280p and repeated its hold rating. The shares responded with a rise of 8.1p to 296.3p. Merrill Lynch has raised its sights on Wood group from 295p to 320p.
The rest of the market looked to round off the week on a firm note with share prices hitting a new 10-month high as investors continued to be buoyed by the first tentative signs that the global recession is coming to an end. Federal Reserve chairman Ben Bernanke said earlier this week that the US economy had hit rock bottom and that there were signs of things improving. The FTSE 100 Index posted its third day of consecutive gains with a rise of 24.35 at 4779.81.
Once again miners led the way, supported by another strong rise in the price of commodities, such as copper, overnight. Rio Tinto put on 38p at 2447½p, Vedanta sported a rise of 50p at 1858p and Kazakhmys 29p at 929½p.
The banks were not prepared to be left behind. Barclays put on 4.3p at 363.7p, Lloyds Banking Group rose 0.9p to 99.4p and Royal Bank of Scotland 0.4p at 46.7p. But HSBC shed 13p at 656.2p, reflecting sell-offs this morning in Hong Kong and Shanghai.
Sterling Energy firmed 0.1p to 2.95p after announcing plans to raise £62.5 million by way of a placing of 4.8 billion new shares. The group also plans to raise a further £20.6 million in November by way of an open offer.
Better-than-expected second-quarter profit numbers from Wal-Mart, the world's biggest retailer, kept New York investors' heads above water on Wall Street overnight. But only just.
The Dow Jones ended 36.58 higher at 9398.19. Investors had to digest some pretty unpalatable economic news which succeeded in damping some of the euphoria which greeted the Federal Reserve's comments on Wednesday, that the worst of the recession was over. The retail sales figures for July fell although most experts had predicted an improvement, while the number of jobless claims last week rose again. Wal-Mart responded to the news that it was back on the growth tack with a rise of 2.5% to $51.78.
In Tokyo, leading shares achieved only modest gains after being pared back in late trading from a 10-month high. Dealers blamed the poor finish on falls in Chinese stock markets.
Mitsushige Akino at Ichiyoshi Investment Management said: “There's no question that the world economy is improving but stock markets have risen farther than is warranted by recovery at this point, making them vulnerable to profit-taking.”
A slew of ratings upgrades for Japanese shares kept the benchmark Nikkei 225 up. Trend Micro jumped after Nomura Securities hiked its rating on the maker of computer antivirus software from neutral to buy, as did Hitachi Construction Machinery whose rating was raised by Mitsubishi UFJ Securities.
The Nikkei finished the session 80.14 points higher at 10,597.33, after briefly touching 10,630.38, its highest level since 6 October.
Hong Kong reversed earlier gains after another steep fall in Shanghai where investors are worried about being hit by a wave of new issues and fundraisers.
The Hang Seng ended the morning session 164.75 down at 20,696.55.
Consumer goods exporter Li & Fung jumped 6.1% to HK$27 after it said profit would improve in the second half of the year. Morgan Stanley upgraded the stock to an overweight rating with a target price of HK$30.
China's Yanzhou Coal Mining jumped 2.2% to HK$12.38 after agreeing to buy Australian coal miner Felix Resources for $2.9 billion.
