Yet more gains for Indices as investors hunt risky assets
City Index June 30, 2011 2:24 PM
<p>The FTSE 100 saw yet more gains of over 1% on Thursday, helping the UK Index to rally for a fourth straight session, with investors bulled by […]</p>
The FTSE 100 saw yet more gains of over 1% on Thursday, helping the UK Index to rally for a fourth straight session, with investors bulled by progress in Greece on passing the newly approved austerity package into implementation law.
FTSE see’s best four day run since March
This week has seen a return of risk appetite amongst investors, with confidence gained by the positive steps made by Greece’s lawmakers to cut debt, and the unity seen in the eurozone, particularly that of French and German banks to help the troubled country. This has helped theFTSE 100 Index to enjoy its best run of consecutive gains since March.
It would appear that all the pieces of the jigsaw have come together this week to smooth the road ahead for Greece to get the vital funds it needs to avoid bankruptcy. We have lawmakers voting for the new austerity package in the Greek parliament, French and German banks agreeing to rollover maturing bonds voluntarily and the EU and IMF seemingly ready to sanction a second bailout. Considering much of May and June’s equity sell off was in direct correlation to the uncertainty within Greece and sovereign debt as a whole, it’s hardly surprising that with confidence getting restored, investors have bought back into risky asset classes such as the heavyweight banks and mining stocks this week, thus lifting European indices.
In the afternoon session, a surprising jump in Chicago PMI data, lifted by a strong bounce in new orders, also helped to maintain the positivity in the session. Chicago PMI rose to 61.1 from 56.6, when a fall to 54.0 was mostly expected by the market.
The immediate return of the FTSE 100 to the 250-point trading range that kept the UK Index in a consolidation pattern for much of the year, before the new sovereign crisis hit, is a positive for stocks. That said, for bull enthusiasts to become more aggressive, we still need to see the FTSE100 breaking new 2011 highs above 6105 and more importantly above resistance levels at 6117.
It is Friday tomorrow and so there is a chance that investors could use the final session of the week as an excuse to cash in some gains ahead of the weekend.
Lloyds shares sees best one-day rally for two years
Lloyds’ shares enjoyed their best rally since April 2009 as investors rejoiced in new CEO Mr Horta-Osorio’s new strategy plan to rejuvenate the part nationalised UK bank. The banks aim to cut 15,000 jobs in an effort to save £1.5 billion in the next four years whilst investing £2 billion in their retail banking operations. Having seen shares slump near 40% since October last year, there has certainly been a bit of bargain hunting happening today, which has lifted share prices.