Today I am looking at two London-quoted stocks standing on fragile ground.

Financial fears

Battered banking play Standard Chartered (LSE: STAN) has managed to defy gravity in recent times, the stock galloping higher despite escalating fears over economic cooling in Asia.

Indeed, the firm has gained 20% in value during the past three months, the company’s value surging in lockstep with a strong uptick in commodity prices. One source of revenues troubles at Standard Chartered has been the steady erosion in metals and energy prices. But the Brent benchmark’s surge back towards $50 per barrel has led many to speculate that these troubles may finally be behind the bank

Shares in Standard Chartered leapt yesterday following results that showed the bank swing to profits of $589m during January-March, improving from losses of $4.1bn in the prior quarter.

But Standard Chartered warned that “depressed commodity prices, volatility in Chinese markets, weak emerging market sentiment and concerns around interest rate and other policy actions” continue to circulate, providing plenty of red flags that could significantly hamper the bank’s recovery.

A huge decline in impairments is of course a welcome step in the right direction — these fell to $471m in the first quarter from $1.1bn between October and December. And massive restructuring that will see 15,000 roles slashed during the next few years is also raising hopes of a marked turnaround at the bank.

However, the scale of financial turbulence in Asia may significantly hamper any revenues recovery at Standard Chartered further down the line, particularly as the firm drastically reduces its presence in these growth regions. And of course the chronic supply/demand balances washing across the commodities sector casts a huge shadow over the bank’s turnaround story, too.

The City expects the financial giant to flip from losses of 6.6 US cents per share in 2015 to earnings of 27.9 cents this year. But this figure creates a huge P/E rating of 43.4 times. Considering the numerous challenges Standard Chartered still faces, I believe such a reading is ridiculously high, and reckon that now is the time for savvy investors to cash out.

On shaky ground

Like Standard Chartered, fossil fuel giant Tullow Oil (LSE: TLW) has seen its share price explode despite its dodgy revenues outlook. The firm’s share price has rocketed 66% since the end of January, with Tullow Oil unsurprisingly also fuelled by the impressive recovery in fossil fuel values.

But crude’s ascent has been underpinned by fragile hopes of an output freeze by Russia and the OPEC cartel, speculation that is yet to come to fruition. Meanwhile, global crude inventories continue to tick steadily higher as patchy demand persists.

Tullow Oil saw net debt balloon 30% in 2015 to stand at a colossal $4bn by December, the result of colossal capex costs in a low oil price environment. So while recent oil price rises may provide some respite, Tullow Oil remains on shaky ground in my opinion.  

The number crunchers may expect the oil producer to snap from losses of 113.6 US cents per share in 2015 to earnings of 8.6 cents this year as its TEN project in Ghana comes online. However, I believe a consequent P/E rating of 84.1 times is far too high given Tullow Oil’s muddy earnings outlook, leaving in danger of a harsh share price retracement.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.