Market Report: Oil prices make markets turn on their heads


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The Independent Online

Stock markets have turned on their heads in recent weeks, with tumbling oil and commodity prices throwing long held assumptions in to doubt.

The collapse of Brent crude in particular has affected almost every industry and left investors scrambling for a safe haven. Nomura picked one out yesterday, tipping Legal & General as a strong bet in the insurance sector.

The Japanese investment bank believes the market has underestimated L&G’s leading position in the bulk annuities market, a key battleground since the Chancellor shook up the pension market this year. What’s more, L&G “was a relative early mover in focusing on cash” and “since 2009, has increased the dividend by 25 per cent per annum”. Nomura adds: “We believe L&G is well placed to carry on this trend”. The endorsement sent the insurer charging to the top of the Footsie, 5.3p better at 246p.

L&G managed to buck a falling market, with the FTSE 100 giving up 38.34 points to 6461.70. Weakness among miners was a particular handicap and Glencore was the day’s biggest fall. The commodities giant, off 11.45p at 294.85p, recently held an investor day, where analysts were disappointed to learn that spending targets for next year have been ramped up by $1.5bn.

Shire has also been welcoming City suits and shareholders, but the pharmaceutical company has done a better job of convincing them that things are on track. Citi said the visit “improved our confidence” in management, sales targets, Shire’s ability to keep purse strings tight and the potential benefits of recent acquisitions. Flemming Ornskov, the chief executive of the Dublin-based drug maker, said the company was in no rush to spend the $1.7bn break-up fee handed to Shire after AbbVie walked away from a merger. Still Shire jumped 136p to 4565p.

Spirent Communications leapt 5.05p to 68p after both Liberum and UBS tipped the company. Eoin Lambe at Liberum labelled Spirent a recovery play, while UBS’s Gareth Jenkins said the company’s recent share price fall means it could be a takeover target.