THE TIPSTER
As recent demand for both sterling and the euro wanes while economic uncertainty persists, buyers are taking advantage of the recent falls in the dollar and loading up on greenbacks. This has started to push up the US dollar trade-weighted index. ETX Capital is currently quoting 8241-8249 for the September dollar index.
It has been a woeful few months for the British travelling public and once again industrial action is on the cards. This time it’s a dispute between airport operator BAA and Unite, although the market seems confident that a resolution can be found. After the disruption caused by the volcanic eruptions in April and strike action by its cabin crews, British Airways’ share price has been holding up well, but there’s no siesta time for BAA’s Spanish owner Grupo Ferrovial. IG Markets’ current price for British Airways is 217.2p-217.3p while the current price quoted for Grupo Ferrovial is €6.407-6.424.
Vedanta’s acquisition of Cairn’s energy business has had contrasting effects on both companies’ share prices. Vedanta’s share price has fallen 20 per cent over the past week to nine-month lows and is nearing a key support level around the 2,000p mark. A break and close below here could well open up further share price losses for the stock in the medium term.
On the other hand, Cairn’s share price has continued to post new all-time highs as the cash injection improves its cash flow and allows it to invest more in exploration activities. It has been finding support at progressively higher levels and has long-term support around 380p. CMC Markets’ spread on Vedanta Resources is 2,143p-2,145p while Cairn Energy is quoted at 484.70-484.90p.
The $9.6bn takeover of 51 per cent of Cairn India by Vedanta may also lead to further consolidation in the energy sector, with FTSE 250-listed Hardy Oil viewed as a possible target. In fact, shares in Hardy, which also has oil interests in India, have shot up by 25 per cent since last Wednesday, suggesting that the market is already starting to see a bid as more than just a possibility.
Hardy Oil’s share price has broken through the 100-day simple moving average at 180p and closed yesterday above the 150-day exponential moving average at 198p. The stock traded around 250p at the start of the year, so there is still scope for further gains should a bid materialise. Spread Co quotes Hardy Oil at 202.85p-203.15p.