Economy
FTSE 100: Welcome performance from Lloyds Banking and RBS |
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| Economy | |
| Written by Roberta Murray | |
| Monday, 25 January 2010 | |
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Predictions that US bank fears would continue to hit UK banking stock today have proved unfounded.
Lloyds Banking Group (LON:LLOY) and RBS (LON:RBS) appear to have weathered the storm wreaked on global financial stocks by US President Barack Obama last week. Despite the gains the two banks had opened a touch lower, ADVFN had the following to say at opening time: "the potential impact of President Obama’s new bank controls continues to weigh heavily on the UK sector, with additional fears that a new chunk of fund raising could be on the cards to meet tougher new capital requirements. "RBS and Lloyds Banking are the worst affected so far this morning, though the Far East focused banks are doing better. Both HSBC and Standard Chartered are higher," stated ADVFN. The FTSE 100 (INDEXFTSE:.FTSE) is higher by 0.11% at 5,308.87 at 10:19am. Robert Pike at Spreadex Ltd says that the markets may have overplayed the Obama announcements on banking reform: "The uncertainty surrounding the detail of the reforms is making the markets extremely nervous. Although many observers believe the Banks will simply 'spin off' their Propriatory desks and operations and continue to operate relatively smoothly, this nervousness has undermined trader confidence. "Obama's comments were timed for maximum political effect and it must be remembered that it is very unlikely the government would deliberately derail the financial recovery, especially when any consolidated recovery would be a huge vote winner for Obama. FTSE 100 technical look Simon Denham, the head of Capital Spreads gives a technical analysis of the FTSE 100 this morning: "The FTSE hit the support mentioned on Friday comment at 5180/5200 and has bounced dramatically this morning. I have to admit the level was pointed out as an academic support as we were not exactly expecting such a dramatic reaction quite so soon. "The support has now been confirmed and we are seeing solid buying from investors looking to get in on the unexpected weakness. Buyers have been kicking themselves for missing out on the Dec/Jan rally and many see this as an opportunity to possible have a second bite at the cherry. "Time will tell if the sell off on the new Puritanism out of the USA is premature but dealers will probably need to be wary of market reactions to seemingly innocuous statements from senior administration officials for the next few months. Resistance to a move back up higher will be at 5310 and up to 5375 which we battled at fro much of November and early December."
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