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Article / 06 October 2016 at 15:14 GMT

EasyJet could turn higher if GBP rallies

Head of Equity Strategy / Saxo Bank
  • EasyJet stock could climb on GBP mean-reversion
  • PetroChina rally likely to fade along with oil
  • UK equities to head lower if pound makes gains

Shares of low-cost carrier EasyJet plunged today, but a rally in GBP 
could see this stock make gains in the near future. Photo: iStock

By Peter Garnry

We have chosen to add a long position in EasyJet (EZJ:xlon) today following its shares declining another 5.5% as Brexit and terror-threat impact business. The bet is partly a stronger GBP bet as EasyJet’s share price is closely related to the currency. 

With our short position in UK100.I, the portfolio is now set up to benefit from a mean-reversion in GBP.

EasyJet weekly price chart (the past five years):

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As flagged on the morning call earlier today, we are going short PetroChina (PTR:xnys) as the stock has overshot to the upside on recent oil rally which Saxo Bank head of commodity strategy Ole Hansen believes will fade as oil above $50/barrel will cause US oil producers to increase production again. 

Our stop in Twitter (TWTR:xnys) was triggered on the open and we booked a 40% profit on the position. We have entered a long position again here in early trading at $20.29 to play a small intraday mean reversion. We expect to close the position later today.  

— Edited by Michael McKenna

Peter Garnry is head of equity strategy at Saxo Bank

10 October
yakcay yakcay
Hi Peter. Can you suggest a Stop for Easy Jet please? Thank you.
11 October
Peter Garnry Peter Garnry
We were stopped this morning on our stop but entered a new smaller long position when the rebound came. I'm writing an update right now


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