FTSE lurches higher after a volatile day of bank and commodity swings
A BOUNCE back by risk-sensitive banks and commodity stocks hauled Britain’s stock index higher yesterday after a roller-coaster session, with worries over the global growth outlook easing following benign US jobless claims.
At the close, the FTSE 100 index was up 13.90 points, or 0.3 per cent at 5,543.95, holding above key technical support at 5,538 after recovering from a drop through the 5,500 level early on.
The gain by the blue chips was the first after a rocky ride which had chopped four per cent off the index in just three straight sessions.
“Investor sentiment towards stocks improved slightly today as bargain hunters emerged from the sidelines. European indices have suffered such big losses in the past few days that it was inevitable that a rally would ensue at some point,” said Angus Campbell, head of market analysis at Capital Spreads.
Movements by miners clearly illustrated the roller coaster session for the blue chips.
Having been the main prop for an early rise by the FTSE 100 index, the sector soon dropped back mirroring copper as data out of top metals consumer China showed headline growth in imports unexpectedly stalled last month.
But the dent to the global growth outlook from that China data was repaired later on by news the number of people applying for US jobless benefits edged down last week, easing concerns after April’s weak jobs report that the labour market was deteriorating.
And official data showed British manufacturing output bounced back more strongly than expected in March, although a steep fall in oil and gas extraction and utilities output pushed wider industrial production down.
The Bank of England made no change to monetary policy following its monthly MPC meeting, leaving UK interest rates at record lows and resisting calls for more quantitative easing as its latest programme came to an end.
“It is possible for the MPC to re-open the tap on asset purchases at any stage, even in principle at least, next month. But more realistically the committee has probably entered a period of ‘wait and see’ during which it will assess the gravity of the economic outlook and further evidence on the extent to which inflation is likely to moderate further over the next year or two,” Investec Securities analyst Philip Shaw said in a note.
As investors’ risk appetite returned to drive the heavyweight miners, energy and banking shares higher, conversely, defensively-perceived stocks were shunned, with drinks group Diageo, British American Tobacco, Imperial Tobacco and Associated British Foods all among the top blue chips fallers.
Consumer goods group Reckitt Benckiser was a big individual FTSE 100 faller, off 3.5 per cent after the firm’s main shareholder, JAB Holdings, said it was cutting its stake in the group to around 10.6 per cent.
Results disappointments weighed on credit checking firm Experian and telecoms operator BT Group, down 4.3 per cent and 2.6 per cent respectively.