Flat Close Belies Choppy Trading Session
FTSE indices closed around breakeven on the first session back after the long weekend, glossing over turbulence earlier in the session
After a long holiday weekend, the FTSE 100 index closed at 5,207.8, up by just 6.2 points or 0.1%, and the FTSE 250 index took on 19.3 points or 0.2% to 9,799.2.
A weakening yen following the Japanese central bank's efforts to curb the currency's increase sent Asian markets lower Tuesday, but Wall Street had managed to recoup early losses at the time of writing, thanks to a slew of data that showed both positive and negative signs of economic progress.
US consumer confidence data for August increased to 53.5 from an upwardly revised 51 in July. The expectations index also jumped to 72.5 from 67.5. However, the present-situation index dropped to 24.9 in August compared with 26.4 in July. US home prices also rose as the Case-Shiller home-price indices reported a 4.4% growth during the second quarter compared with the first quarter and a 3.6% growth compared with a year earlier. Prices showed a solid increase for the third straight month in June. However, year-over-year increases slowed in June compared with May's readings, and sales of previously owned homes fell sharply by 27% in July. The Chicago purchasing managers index also declined in August to 56.7 from 62.3 in July. Although the percentage drop indicates that business expansion is slowing, it was still in line with expectations.
In the UK, the flurry of data from across the pond helped to reassure investors that the demand outlook for metal extractors isn’t as weak as some fear, bolstering the share prices of London-listed miners such as Fresnillo and Randgold Resources. Precious metals have proven increasingly attractive of late as talk of a double-dip recession has gathered pace.
But it was ARM Holdings that topped the FTSE 100 leaderboard on Tuesday, jumping 8.6% following news Intel has bought Infineon’s wireless unit. Intel said it would continue to support the British company’s chip designs that Infineon uses, but support also came from speculation that the tech sector is looking particularly attractive to those on the lookout for acquisitions, following big M&A deals in the United States earlier this month.
Banks also attracted investors, with part-nationalised Royal Bank of Scotland and Lloyds Banking Group 2.5% and 1.3% higher, respectively, by close of play.
On the flipside, a handful of stocks that had enjoyed gains in the previous week felt the pressure as investors locked in profits. BG Group, which last week was the focus of the M&A rumour mill, lost 1.6%, and Serco Group shed 2.5% after a strong mid-week rally fuelled by pleasing first-half results last Wednesday.
