FTSE finishes week with a whimper
City Index February 18, 2011 9:32 PM
<p>The UK’s FTSE 100 index ended the week with a whimper as it pared early losses to close down 20 points. The morning session saw […]</p>
The UK’s FTSE 100 index ended the week with a whimper as it pared early losses to close down 20 points. The morning session saw a sell off dominated by the mining sector in response to China raising its bank reserve requirement for a fourth time in two months. Inflationary concerns in China remain at the forefront of investors’ concerns and although a move to raise reserve rates caused downward pressure on the mining sector, investors seem boosted by the proactive nature of the Chinese authorities to curb the overheating economy.
The mid-day and afternoon bounce saw stocks rally off their lows with banks and miners recovering from early falls. With a lack of US data to focus attention, traders were circumspect about a week that has seen the FTSE reach new two-and-a-half-year highs, but fail to close above the 6100 level. The FTSE 100 remains locked it in a tight range, and in a week that has seen stellar numbers from Barclays Bank, solid retail sales numbers and as expected inflationary data, investors have pushed the FTSE to new highs but have been unable to consolidate above these highs.
Across the pond, traders have been equally reflective as the S&P traded up 4.5% on the month, double the level at the depth of the crisis – a 100% rally in under two years. Although this suggests a resurgent equity market, recent volumes have been low and there remain lingering concerns. In the short term, tensions in the Middle East remain on the agenda, and more long term the lagging US employment market is a cause for concern. Flirting with these new highs, the market seems to be approaching an important test of resolve as it attempts to break through key levels, in reality with underlying concerns remaining it may be that the market is set to trade within this range for a while yet.
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