FTSE flirts with new highs
City Index February 16, 2011 4:41 PM
<p>The FTSE rallied to new highs today as banks and oils drove the index toward the 6100 level for the first time since late 2008. […]</p>
The FTSE rallied to new highs today as banks and oils drove the index toward the 6100 level for the first time since late 2008. Banks and oils took centre stage as HSBC rallied 20 points on prospects that forthcoming results could be at the top end of expectations.
The hope is that Barclays’ excellent numbers have set the tone for a solid reporting season from the financials, including state owned giants RBS and Lloyds. RBS rallied nearly 4% to 47p as Credit Suisse and Deutsche suggested they could be the best placed to benefit from recent regularity changes. The breadth of the rally was what cheered investors as oils, miners and insurers drove the market higher. GKN topped the FTSE leader board after Investec started its coverage with a 243p price target, while non-life insurer Resolution vied for the top spot as a bullish broker note buoyed investors.
Trader confidence was boosted as Mervyn King suggested that rate rises could be further off than the market is pricing; a less hawkish outlook helped the FTSE consolidate on early gains and head towards 6100. Inevitably, sterling suffered as the currency retreated half a percent against the dollar. Positive news from across the pond helped consolidate investor confidence as M&A activity and solid corporate earnings lifted the US equity markets in early trading.
Sanofi’s $20bn takeover of Genzyme and stellar numbers from computer maker Dell saw the Dow add 80 points and the S&P – a healthy 0.75%. The S&P 500 is now trading at double the level of the index at the depths of the financial crisis, and despite these heady heights, traders show no signs of taking money off the table. With a fresh round of weekly job data tomorrow, decent macro numbers could be the catalyst to drive the market on to new highs
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