FTSE rising but investors wary
BRITAIN’S main equity index ended little changed after giving away most of its gains in late trade yesterday, in a sign investors lacked the confidence to sustain a recent rally in the absence of greater visibility on the Eurozone crisis.
The FTSE 100 closed up 4.81 points, or 0.1 per cent, at 5,356.34 points, having stretched as high as 5,413.83 points in morning trade.
Traders said investors were happy to book their intra-day profits as uncertainty surrounding the Eurozone, where concerns about Spanish banks sent local government bond yields jumping and the common currency slipping towards two-year lows, made it too risky to bet on a sustained market recovery.
“Most of the people on the buy side we spoke to are more bearish than bullish,” Oliver Stansfield, director of equity sales at Fox-Davies Capital, said.
“They are also still concerned that volumes are going to remain fairly thin over the next few months, with the summer and the Olympics.”
With Wall Street shut for Memorial Day, the FTSE had traded little over half of its 90-day volume average by the close. Low volumes amplify share price volatility and, with fewer investors, also make it harder to get in and out of positions quickly.
The FTSE has so far failed to validate a bullish trading pattern known as a “double bottom”, where two lows of increasing height are formed.
“A support base has shaped around 5,254 and has allowed for a temporary stabilisation” Nicolas Suiffet, a technical analyst at Trading Central, said.
Suiffet said a push above today’s high of 5,413 would call for a “limited recovery” towards the index’s recent high of 5,465 and the index’s bearish 20-day moving average at 5,495.
Miners added most points, boosted by hopes of more stimulus from China, the world’s largest metals consumerte its economy.