FTSE trades marginally higher for 8th straight session though Dollar advance warns of profit taking
City Index July 5, 2011 4:12 PM
<p>The FTSE 100 traded higher for an eight straight session, marking the best run of gains for the UK index for nearly a year. However, […]</p>
The FTSE 100 traded higher for an eight straight session, marking the best run of gains for the UK index for nearly a year. However, with the greenback US dollar advancing, and speculation in the press over a potential imminent Chinese interest-rate hike, traders may be happy to take some risk off the table at current levels.
The FTSE 100 has not seen such a hot streak of consecutive gains for nearly a year, when the UK Index rallied for 11 straight days in July 2010, rallying over 10% in the process. To that end, it may be difficult for the FTSE to maintain its upside momentum considering the amount of economic data due out later this week. Traders could be willing to cash in their gains in case US non-farm payrolls badly disappoint for a second month running.
One of the areas we have started to see traders cash their gains in has been the mining sector. The sector itself has rallied 12% in the last two weeks alone, and with a stronger US dollar, speculation over a potential interest rate hike to come imminently in China, aligned within the context of a volatile week ahead in terms of economic data, it is not surprising to see traders downsize risk here. Shares of Rio Tinto have been one of the key drags on the UK Index today, falling over 1% in trading, along with similar falls for peers Xstrata and BHP Billiton.
Reckitt Benckiser tops FTSE on bid talk
Shares of Reckitt Benckiser rallied near 2% on Tuesday, topping the FTSE 100 leaders list on swirling bid talk. The UK consumer goods firm has been the subject of bid talk for quite some time, with some press mentioning its bigger rival Proctor & Gamble as a potential suitor. Shares have rallied 8% in the last three weeks as speculation has gathered pace. It remains to be seen as to whether any definitive bid may come from the rumours but certainly investors remain hopeful that the sector may be primed for consolidation.
UK services grows more than expected
UK’s service sector grew more than expected last month, giving the coalition government some well needed good news, though in truth, the data remains stubbornly weak. UK PMI services grew to 53.9 in June, from 53.8 in May, when the market was expected a small fall to 53.5. Whilst this measure bucks the wider macroeconomic trend of disappointment, it is unlikely to get the hearts racing anytime soon and points to a continued soft path in UK growth.
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