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Standard Chartered Continues Recovery on Flat FTSE

Standard Chartered & AMEC were the biggest movers on the benchmark FTSE 100 on Thursday

Alanna Petroff 10 August, 2012 | 2:54PM
Thursday marked another relatively flat day of trading in the UK, with both the FTSE 100 and FTSE 250 indices registering very little movement to the upside or downside. The FTSE 100 lost 2 points to close at 5,844, while the FTSE 250 added 16 points to close at 11,455.

“With traders around the City glued to their screens watching Team GB steadily accumulate more medals, the atmosphere in the markets is almost deathly quiet,” said David Jones, chief market strategist at IG Index. “The strong reading from last week's jobs report still lingers, but we look in vain for something that will provoke a significant move ... So long as eurozone politicians remain on their holidays, we might be able to extend this quiet period into next week, markets having been blissfully free of any unfortunate pronouncements of late.”

Standard Chartered, AMEC and Aviva
While the markets seemed placid on the surface, there were a few key companies that broke away from the sideways trading trend.

The embattled Standard Chartered (STAN), which is being accused of executing illegal financial transactions for the Iranian government, saw its shares continue to recover. Shares in the company plunged by roughly 25% in two days after the accusations were levelled against the bank by a powerful New York regulator. Now shares are slowly recovering.

Shares in AMEC (AMEC) tumbled by 5% after the international engineering and project management company reported half-year interim results. Management revealed they were expecting weaker revenue growth in the second half of 2012, prompting investors to question the current value of the company’s shares.

In their latest research note, Shore Capital analysts Jon Bell and Gavin Jago explained that they are now less bullish on AMEC because of the “somewhat more cautious tone from the company, evidence elsewhere of the effects of the global slowdown .. and with the shares trading at the top end of their recent range.”

The insurer Aviva (AV.) also reported first-half results on Thursday, showing a loss for the period.

“Despite challenging economic conditions, Aviva’s first half 2012 results were largely in line with our expectation,” says Morningstar analyst Vincent Lui. “Overall, the shortfall in life insurance profit was partly offset by a higher non-life insurance profit. The life insurance business posted a 7% drop in pre-tax operating profit to £1 billion, driven primarily by adverse foreign currency movements and lower investment income. The strong performance in the non-life insurance business was helped by favourable claim experience and disciplined cost management, resulting in an improvement in the combined operating ratio.”

By the close of the day, Aviva shares had dipped down by 0.5%.

Chinese Data Shows Continued Slowdown
On the economic front, investors and traders keenly watched the Chinese data , which was released this morning.

“The Chinese data this morning was always likely to be a ‘win-win’ scenario for those investors trading on the front foot,” said Joshua Raymond, chief market strategist at City Index. “Weaker-than-expected data would likely increase optimism that China could inject fresh stimulus to help growth bounce back in the second half of the year, whilst stronger-than-expected data would help to ally fears of a faster slowdown of activity in the country. As it happens, the former element [took] place this morning.”

For an overview of market and economic developments from earlier in the week, read these articles:
- Monday: 
Scandal Erupts at Standard Chartered
- Tuesday: Upbeat FTSE Session Marred by Standard Chartered
- Wednesday: FTSE Steady; BoE Cuts Economic Growth Forecast

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.