Miners and Asian rally push FTSE closer to 5,000
The UK's blue-chip index added another 40 points on Monday as metal extractors helped it reach another high for 2009
The UK’s benchmark index took on 41.2 points on Monday to close up 0.9% at 4,892.1, having hit an intraday high of 4,911.4. The FTSE 250 index added 132.2 points or 1.5% to 8,811.1.
A report released in the early hours of Monday morning from the Institute of Chartered Accountants in England and Wales (ICAEW) was partly responsible for the positive market sentiment. The Institute’s Business Confidence Monitor has moved into positive territory this quarter for the first time in two years, surging to +4.8 from the second quarter’s -28.2 reading, prompting the ICAEW to predict the British economy will grow by 0.5% in the third quarter.
This news spurred investors on to buy into the market rally, with financials such as Royal Bank of Scotland and Lloyds Banking Group leading the blue-chip index higher. The two banks’ shares jumped 6.8% and 6.3%, respectively, with the latter receiving a further fillip from a weekend press report that insurance-focused investment vehicle Resolution is in talks with the group regarding a potential sale of its Clerical Medical business.
Elsewhere, London-listed miners played a significant role in the FTSE 100’s rise as stronger metal prices fuelled sector gains. Kazakhmys, Eurasian Natural Resources and Rio Tinto were among the top industry performers, each gaining between 4.9% and 5.8%.
Metals weren’t the only commodities to see their market prices increase; the cost of black gold moved towards $75 per barrel on Nymex amid hopes of a rebound in global demand as the world economy recovers. Tullow Oil, Cairn Energy, Royal Dutch Shell and BP took on 0.1%-1.7% apiece.
Among those stocks in the news, Centrica added 2.6% after announcing it has now either bought or received acceptances for just over 50% of Venture Production, essentially giving the British Gas-owner control of the oil & gas firm. Shares in Venture ticked up 0.1% on the FTSE 250 index.
Oil & gas services provider Petrofac was under the cosh, meanwhile, as investors took the better-than-expected first-half numbers and upbeat outlook as an opportunity to take profits. Petrofac this morning said it expects to achieve earnings growth of 20% in 2009, but shares in the group had slipped 0.8% lower by close of play.
But it was G4S, the security services firm, that led the losers, down 3.5% after issuing mixed interim results. The Anglo-Swedish group topped consensus expectations at the revenue level but adjusted pretax profits missed forecast and organic growth continued its downward trend.
On the second line, housebuilders were in demand after Bovis Homes highlighted a stabilisation in the UK housing market. Despite reporting a 90% slump in pretax profits to £1.2 million in the first half of 2009, this was still better than the market’s forecasdt of a loss of similar magnitude. As such, Bovis shares closed 2.9% higher, while peers Redrow, Taylor Wimpey, Barratt Developments and Bellway added 3.1%-5.3% each.
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