Doddering fiscal cliff talks prevent FTSE from jumping towards 6,000
BRITAIN’S top share index steadied around nine-month highs yesterday, pausing within reach of the 6,000 points mark.
Investors were discouraged from pushing the market too much higher by the lack of progress by US politicians on a deal to avoid a “fiscal cliff” of planned tax hikes and spending cuts that threatens the health of the world’s biggest economy in 2013.
But many market players expect a compromise will be found which, combined with traditional seasonal inflows from investors taking the final chance to boost annual profits, could give the stock market a fresh leg-up in coming sessions.
The FTSE 100, which is up 1.7 per cent so far this month, has posted gains for the past nine Decembers.
“People are pretty much resigned to the fact that even if this fiscal cliff agreement doesn’t happen by the end of the year, it will certainly happen by the end of January, but that optimism is waning slightly,” said Zeg Choudhry, head of equities trading at Northland Capital Partners.
The UK blue chip index closed down 0.05 per cent or 3.3 points at 5,958.34, in sight of the 5,977.82 nine-month intraday high set the previous session.
Today’s expiry of December options could well galvanise the market into trying the 6,000 level – last seen in July 2011 – given the concentration of bets around that level.
“And if it doesn’t happen [today] we may well get there next week” Choudhry added.