Market Report: Backing for Barclays despite threat of foreign-exchange scandal mega-fine
Some weeks it feels like you can’t pick up a paper without seeing another multi-million-pound fine for banks up to no good, but City stock pickers think there could be at least one diamond in the rough.
Goldman Sachs upgraded Barclays to a Buy today, arguing that the bank could be turning a corner.
Goldman’s Martin Leitgeb thinks the return of volatility to global markets means Barclays’ down-and-out investment bank should begin to recover. More benign than expected leverage proposals mean the bank is less likely to need to raise extra cash, while also giving Barclays more flexibility to restructure its investment bank.
The one, big, overhanging issue is the foreign-exchange rigging scandal, but earlier this month regulators took action with a group of banks, not including Barclays, and Leitgeb thinks this signals that the wheels are turning quicker than expected. He still expects an eye-watering, £4 billion reprimand for Barclays, but the upgrade helped the bank to top the Footsie, up by 4.6p to 242.55p.
Oil dominated trading today with a sea of red among producers. But strength among miners balanced things out, with the FTSE 100 up 9.59 points at 6738.76. Rio Tinto climbed 45p to 3046.25p as it announced the expansion of its Canadian diamond-mining operation.
Royal Mail dipped 5.7p to 417.35p as Jefferies cut its target price. Coca-Cola and SABMiller, off 8p at 3519.5p, revealed a new bottling joint venture, Coca-Cola Beverages Africa. As part of the deal Coca-Cola is acquiring SABMiller’s Appletiser drink and rights to 19 other non-alcoholic drinks for $260 million (£164.9 million).
GlaxoSmithKline inched up 6p to 1470.25p as the US trade commission rubber-stamped its acquisition of Novartis’s vaccine business and the creation of a consumer healthcare joint venture between the two. The deal must still clear anti-trust regulators and be approved by Glaxo shareholders
Monitise rose 3.25p to 33.87p as the mobile-payment specialist announced it has agreed a £49.2 million investment from Santander, Telefonica and MasterCard through a placing. Monitise said the investment will “accelerate the rollout of its global-platform capabilities”.
