Sector movers: Financial services, oil firms gush higher

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Sector movers: Financial services, oil firms gush higher

Wed, 29 March 2017
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3i Group Quote more

Price: 917.00

Chg: 9.50

Chg %: 1.05%

Date: 17:09

FTSE 100 Quote

Price: 7,310.64 Chg: 46.74 Chg %: 0.64% Date: 16:59

(ShareCast News) - Financial services firms stood out on Wednesday, as an upgrade out of Morgan Stanley boosted stock in 3i to the top of the leaderboard on the Footsie.
The American broker spied underappreciated value in the firm's holdings in non-food retailer Action.

3i had valued Action at €5.5bn or 142.0p per share using a valuation method focused on its operating earnings, or EBITDA using the relevant acronym.

Yet add up its estimated future cash flows and assign them a 'present value' by discounting them via the appropriate interest rate and that holding was worth north of €10.0bn or 250.0p a share to 3i, the analysts said.

That led Morgan Stanley to hike its target price on the shares from 710.0p to 832.0p and lift its recommendation from 'Equalweight' to 'Overweight'.

Not far behind were oil-related shares as crude oil futures extended their recent bounce higher.

Stoking Wednesday's gains was data showing sharp declines in oil product stockpiles in the States.

Commercial crude oil inventories rose by 0.9m barrels during the week ending on 24 March (SP Platts: 0.3m b/d), according to the Energy Information Administration, the Department of Energy's statistical arm.

However, gasoline inventories fell by 3.7m barrels, while those of distillates decreased by 2.5m barrels.

Judging by the reaction in crude oil futures to Wednesday's inventory data, Capital Economics's Joseph Oyegoke said markets had chosen to focus instead on rising refinery runs (as many came out of maintenance), higher exports and strong demand for products.

Also of interest according to Oyegoke is the fact that US oil production in fact rose by 18,000 barrels a day, although net imports acted as an offset, as shale production increased.

The oil service sector received an additional boost in the form of an upgrade on Nostrum Oil and Gas out of Credit Suisse to 'Outperform' from 'Neutral'.

Its analysts also hiked the price target to 535p from 440p, pointing to an eventful year ahead which included the successful completion of the GTU3 well, securing enough 2P reserves to produce at nameplate capacity and the expected refinancing of two issues of debt.

Top performing sectors so far today
Industrial Metals & Mining 2,420.90 +4.16%
Financial Services 9,757.51 +1.12%
Tobacco 59,541.96 +1.07%
Oil Equipment, Services & Distribution 16,183.84 +1.01%
Oil & Gas Producers 7,898.22 +1.00%

Bottom performing sectors so far today
Insurance (non-life) 2,838.54 -0.72%
Life Insurance 8,245.09 -0.63%
Household Goods & Home Construction 17,613.81 -0.58%
Electricity 8,765.93 -0.57%
Software & Computer Services 1,906.47 -0.35%