FTSE treads waters as lack of action from ECB leaves investors nervous
BRITAIN’S FTSE 100 share index stalled near the top of its recent range yesterday, supported by prospects of global central bank stimulus but struggling to break fresh ground ahead of a potentially gloomy earnings season.
The European Central Bank reaffirmed its commitment to the euro and its plan to buy bonds to bring down their borrowing costs – pledges that have boosted global equities and helped the UK index add 6.4 per cent since late July.
But it offered no fresh catalysts for the market, with no new remedies and no steer on whether Spain will agree to the strict terms necessary to launch the bond purchases, seen as key to resolving the Eurozone crisis.
“The overall tone is slightly disappointing,” said Derry Pickford, a macro analyst at fund management firm Ashburton.
The FTSE 100 closed flat at 5,827.78 points, shrugging off an expected decision by the Bank of England to leave monetary policy unchanged, but failing to hold on to a one-week intra-day high of 5,854.16 points.
The third-quarter earnings season, which kicks off in the US with aluminium giant Alcoa reporting on Tuesday, could further muddy the outlook.
UK companies are expected to report a 7.2 per cent drop in third-quarter earnings versus a year ago, according to Thomson Reuters Starmine data.
Underscoring the risks, shares in Tesco fell three per cent, hit by a string of analyst downgrades a day after it reported its first fall in profits in 20 years.