Ireland downgrade cancels out strong financial releases

The FTSE 100 has been fluctuating around the previous-session close-value despite a fresh batch of upbeat corporate results across the sectors. At 10:20BST the UK’s blue-chip index is at 5,151.52 – just four points shy of the close value on Tuesday with a decline of 0.09 per cent – with investor sentiment being hampered by a downgrade for Ireland’s credit rating, a deal delay for Tullow Oil (LON:TLW) and avoidance of risk assets in light of growing economy recovery fears.

Kate Neilson
shareprices.com - Wednesday, August 25, 2010

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Ireland's long-term rating has been downgraded

Investors have been hit with a fresh blow this morning after Standard & Poor’s cut Ireland’s long-term rating by a single notch to ‘AA-‘ late on Tuesday. The financial services company downgraded Ireland because the cost to the government of supporting the financial sector had risen significantly.

The news has cast a new dark cloud above London stocks, despite a raft of positive financial reports across sectors.

Trying to push the FTSE higher is Admiral Group (LON:ADM) with gains of almost five per cent this morning.

The car insurer released a positive earnings report and boosted investor interest with an outlook statement expecting full year results to be particularly strong. The share price has gained a massive 62p as a result.

Following closely on the FTSE 100 gainers charts with a 2.8 per cent share price rise is Serco Group (LON:SRP) after it released a half-year statement saying pre-tax profit was up more than 20 per cent. The support service sector was expected to suffer from the government’s spending cuts, making the release all that more encouraging for potential investors.

Mining stocks should be pressing higher with firmer metal prices. The price had shrunk following demand concerns being reignited by poor housing figures from the US. Precious metal group Fresnillo (LON:FRES) is the top mining stock, up 0.5 per cent.

Heading the anchoring stocks is Tullow Oil (LON:TLW) despite the group releasing a positive earnings report. The stock is down 5.3 per cent with a decline of 69p after the oil explorer warned there may be possible delays for projects in Uganda.

A tax dispute between Heritage Oil (LON:HOIL) and the Ugandan government means an extended timescale for Tullow's acquistion of the rival oil group.

Fellow oil stocks also suffered with BP (LON:BP) shedding 1.5 per cent, BG Group (LON:BG) declining by one per cent and Royal Dutch Shell (LON:RDSA) down in the region of 0.7 per cent.

Banks are also continuing to suffer from investor aversion of risk stocks due to the slowdown in the global economy. Royal Bank of Scotland (LON:RBS) and Lloyds Banking Group (LON:LLOY) are the biggest decliners in the sector, both losing over 0.7 per cent.

 

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