FTSE rallies on strong ADP jobs number
City Index January 5, 2011 7:17 PM
<p>The FTSE 100 recovered sharply from near its session lows as investors bought into equities bulled by a much stronger than expected change in US […]</p>
The FTSE 100 recovered sharply from near its session lows as investors bought into equities bulled by a much stronger than expected change in US ADP employment.
Much of the trading session before the ADP number came out was lacklustre at best, with the day being mostly about strength in the banking sector outweighing weakness in the miners.
We had started to see traders lock in their profits in the miners late yesterday and this has firmly continued today with the mining sector the key drag on European Indices. However, strength in banking stocks has helped to curtail some of the mining induced weakness the FTSE 100 had seen for much of the day to help lift the UK Index into positive territory for a second straight day.
Banking stocks have underperformed the FTSE’s charge higher since July last year and so today’s rally in the banks could be about investors hunting better value on expectations that equities will remain bullish this year.
Overall European Indices have traded weaker however making the FTSE 100 the standout Index of the day. The DAX and CAC have both traded around 0.8% lower weighed by the fall in commodities and miners. The US dollar index has gained 1% today, a very strong move, and this has induced profit taking in commodities stocks where investors have reaped some nice rewards of late after Copper hit record highs and crude traded at 2 year highs.
Retailers in focus
It has certainly been a day where retail stocks have grabbed all the headlines. Next shares jumped 4% higher after the retailer reported a 6.1% fall in sales at stores open more than 12 months. The fall was in line with market expectations and mostly shareholders have cheered the news as they had feared that the severe pre Christmas weather conditions may have resulted in a more dire sales drive.
HMV woes continue
HMV shares however continued to cause grave concerns for shareholders after the gaming, dvd and music retailer reported a sales drop of 13.6% and said it would have to close around 60 stores as it struggles to meet bank lending requirements. Shares slumped another 20% today, continuing the bearish theme that hit its shares last year which fell 65%. There remains massive uncertainty over the ability of the company to turnaround its fall from grace and today’s share price action can be seen as yet another vote of no confidence in the firms directors to stage that recovery.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.