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FTSE holds steady after strong week

by Daniel Grote on Jul 04, 2014 at 10:28

FTSE holds steady after strong week

The FTSE 100 has held steady after a strong week, with profit-taking and a dip for miners following a drop in metal prices holding the index back from further gains.

The UK blue-chip index was down six points, or 0.1%, at 6,860, with miners amongst those losing ground. Anglo American (AAL) fell 13p, or 0.9%, to £15.12, while Rio Tinto (RIO) shed 14p, or 0.4%, to £32.84, as they were hit by a decline in the copper and nickel prices.

Sports Direct (SPD) was another faller, giving away some of the gains made in yesterday’s trading, as a report in The Guardian claimed leading investors in the company were set to vote against the re-election of some board members in protest at its bonus scheme.

Sports Direct secured approval for the bonus scheme earlier this week despite the opposition of some shareholders. Shares in the company have fallen 6.5p, or 1%, to 761.5p in this morning’s trading.

Easyjet (EZJ) was the biggest gainer, adding 34p, or 2.5%, to £13.81, after the budget airline operator announced passenger numbers had risen 10.1% in June. ‘We consider these to be encouraging numbers,’ said Wyn Ellis, analyst at Numis. ‘Strong traffic and loads are an important element of the yield picture – but the crucial missing factor is price, where (as usual) we have no information with the traffic stats. High loads, however, are normally a positive sign in this regard.’

British Airways owner International Airlines Group (ICAG) was also up, adding 5.1p, or 1.4%, to 370.1p.

ITV (ITV) rose 1.7p, or 0.9%, to 185.5p after analysts at UBS upgraded the stock from ‘neutral' to ‘buy’, while BT Group (BT) was another winner, trading 3.7p, or 1% higher, at 392.6p after agreeing an insurance deal against its pension costs.

Among ‘mid cap’ FTSE 250 stocks, online supermarket retailer Ocado (OCDO) was once again one of the big movers, falling 13.5p, or 3.1%, to 426.5p after two days of solid gains.

The Accumulator: a record-breaking week

While US markets stole the headlines after the Dow Jones index breached the 17,000 mark for the first time in its history, the performance of UK stocks was even more impressive.

The FTSE 100 is on course for its best weekly gain in almost nine weeks. As our exclusive Accumulator table shows, the UK blue-chip index notched up an impressive 1.6% return in the week to yesterday. Fresh evidence of the strength of the UK's economic recovery has played a big part in those gains. On Tuesday, we learned that UK manufacturing was expanding at its fastest rate in seven months, while Wednesday brought us news that construction activity was growing at levels rarely seen since figures were first collected. And while the purchasing managers' index figure for UK services in June, reported on Thursday, was down on May's reading, it was still at elevated levels.

In the US, it was a similar story. Aside from the Dow's 17,000 milestone, it was also a healthy week for the larger, and more representative, S&P 500 index. Already trading at all-time highs, it rose 0.6% over the week, and is now not far off breaching 2,000. Surprisingly good jobs data showed the US had well and truly shaken off its winter blues, and provided investors with a fresh dose of confidence.

Russian stocks entered the red last week after weeks of impressive gains, as tensions with the Ukraine escalated. After a 10-day ceasefire expired on Tuesday, fighting resumed in eastern Ukraine. However, India's rally following the election of prime minister Narendra Modri resumed this week after a small breather.

But the number that catches the eye the most is the big drop in the oil price, down 4% over the week. Concerns that fighting in Iraq could disrupt supplies have begun to wane, while in Libya, rebels' return of two oil terminals to government control also led the price lower.

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