Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Investors take stock after FTSE's three-week rally

Investors take stock after FTSE's three-week rally

Investors in European shares booked some profits, taking stock after yesterday’s all-time highs on Wall Street and a FTSE winning streak that has endured most of February.  

With the exception of one day, the FTSE 100 has risen uninterruptedly for three weeks. Yesterday markets celebrated an increase in merger activity, economic optimism and relief that the political crisis in Ukraine may avoid slipping out of control. The US S&P 500 hit a record high, rising above 1,850, before closing at 1,847.

But on Tuesday morning that exuberance was tempered by some less than stellar corporate numbers, as well as renewed jitters over the Chinese economy.

China’s benchmark index had fallen 2% overnight amid concerns about a cooling property market and falling currency. The fears were sparked by the news that China’s Industrial Bank is cutting lending to property developers.

Mining shares were as usual following China’s fortunes and exerted a drag on the FTSE 100, with Rio (RIO.L) and Anglo American (AAL.L) down around 3%. The FTSE was down 0.6% at 6,824.

London mid-cap Ashmore (ASHM.L) fell nearly 9% to 310p after the emerging markets focused asset manager reported pre-tax profits of £79.5 million for the second half of 2013 compared with £120.3 million in the same period last year. The group was particularly hard-hit by emerging market currency losses.

Some analysts spotted a buying opportunity in the shares. ‘We consider Ashmore to be a well-managed specialist fund manager, however it would be easier to take advantage of what should be a negative correction today if the outlook statement gave greater insight into a potential return to net inflows,’ said analysts at Espirito Santo.

Engineering group GKN (GKN.L) was also concerned about the impact of currency movements on its business, using its full-year results to warn ‘adverse currency could provide a significant translational headwind’. The company reported a 7% rise in annual profits.

Today’s 3% decline in GKN’s share price to 402p comes after a 65% rise over the past 12 months.

‘Today's FY13 result is ahead of our forecasts, but the FY14 outlook may not be enough to add momentum to the equity story,’ said Sandy Morris of Jefferies, noting any good news was already priced into the shares. ‘We don't believe the GKN equity story is over, just that some water may need to go under the bridge, notably in relation to debt reduction.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Henderson Eurotrust's Stevenson: dealing with European cynicism

Henderson Eurotrust's Stevenson: dealing with European cynicism

Tim Stevenson talks about where he finds his opportunities in the current environment in Europe

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Read More
Wealth Manager on Twitter