FTSE ends flat as UK enters double dip recession

Despite a positive start this morning after relatively well received bond auctions in both Spain and the Netherlands yesterday along with forecast beating corporate results, the benchmark UK index was unable to sustain its early rally, seemingly going into the close with a loss of 20 points but finding the energy for a rally in the last 10 minutes of trading leading to a flat close.

At its high, the FTSE 100 had climbed 15 points – taking into account 6.8 points that have been knocked off the FTSE 100 Index as a result of stocks going ex-dividend.

The gains were however tempered by UK first quarter GDP results (released at 9:30am GDP), which came in worse than expected leading to initial knee jerk reaction selloff of the blue chip index. The Gross Domestic Product reading was expected to be reported at +0.1% following the previous quarter’s figure of -0.3%. However, the actual figure for the first quarter came in at is -0.2% (contraction), confirming that technically we are now in a double dip recession.

There was a glimmer of hope for the FTSE 100 at 2:30pm GMT as the US markets opened firmer following the outstanding results from Apple released after the closing bell yesterday; however this quickly proved not to be much of a catalyst for the UK market which struggled to stay positive. The Nasdaq on the other hand was trading comfortably up 0.8% as Apple shot through $600 per share, jumping over 9% in early trading after their strong earnings reported net income almost doubled for the March quarter period.

Consequently ARM Holdings (provider of Apple Smartphone chips) received several broker upgrades; its shares subsequently led the FTSE 100 leader board with gains of over 4%. The miners were also notable risers on the blue-chip Index this afternoon. This sector which is often sensitive to the outlook of the Chinese economy made gains following positive comments from the Chinese Prime Minister who attempted to ease concerns raised by the government reducing its growth forecasts from 8% to 7.5% earlier in the month.

This evening attention will turn to the FOMC announcement on interest rates and liquidity due after the close of the European markets. Analysts will be looking closely for signs as to whether policy makers have become more or less inclined to expand the Fed’s bond buying programme in the form of Quantitative Easing. However it is widely expected that any explicit hints are unlikely to be thrown around at this point.