THE TIPSTER
BP’S NEWS that the Macondo well in the Gulf of Mexico has finally been completely capped came as welcome news. The stock has responded well, rising over 1 per cent in early trade yesterday. This could be an opportunity for the oil giant to draw a line under the catastrophe and hopefully regain some of the share price losses. Capital CFDs quotes a price of 409.0p-409.9p for BP.
A survey released yesterday suggested that the manufacturing sector is finding it increasingly difficult to borrow money since banks remain cautious over the strength of the recovery. Next week will see results from Wolseley who have been doing well compared to others in the sector. Analysts predict that larger players could squeeze out some smaller firms with more restricted access to capital. Cantor Index offers a December spread on Wolseley of 1430.4p-1441.1p.
Gold and silver are both in the headlines as precious metals receive support regardless of the economic outlook. A double dip will push more investors into safe havens whilst continued economic expansion will keep buoying demand. Extractors are undoubtedly in favour. Fresnillo, the world’s largest silver producer, has already seen its share price increase more than ten fold in the last two years from below the 100p mark. The current IG Markets price is 1175p-1178p
For someone looking for a low-risk, reasonably neutral trade, a pairs trade on Lloyds and RBS might be worth considering this week. Over the past three months, Lloyds has outperformed RBS by almost 30 per cent, which has caused their pairs spread to pop out to 1.57. This spread typically trades around 1.32 and was as low as 1.25 in June. The trade would be to sell Lloyds and buy RBS looking for this spread to converge towards the mean again for profit. To keep the trade neutral you would buy 157 lots of RBS for every 100 lots of Lloyds you sell. Spread Co offers a spread on Lloyds of 75.91p-76.06p and on RBS of 48.38p48.5p.
Having opened 53 stores in the last five years, accounting for 41 per cent of the estate but only 15 per cent of profits, the pawnbroker H&T looks like it offers a great growth opportunity. IG Markets offers a December spread of 292.06p-294.40p.