There are only 29 trading days left until former Goldman Sachs investment banker Mark Carney steps into the Bank of England Governor’s shoes and the UK market continues to fly.
Rampaging bulls believe the Canadian could arrive in the City of London in time to celebrate a new milestone for the fabulous Footsie.
They are confident that the elite index will join other European bourses and soon breach the all-time high of 6,950.60, which was attained on December 30, 1999. It hasn’t got much further to go.
It yesterday closed above 6,700 for the first time since October 2007, rising 35.26 points to 6,723.06, only 3.3 per cent below the peak. It has soared 13.4 per cent so far this year after its 6.5 per cent increase in 2012.
Wall Street initially traded 58 points higher and has jumped more than 16 per cent this year. The Federal Reserve’s purchases of $85bn a month in bonds has been a significant driver of the strong rally in equities which has seen the Street of Dreams achieve an incredible 20 record closes this year.
Bears have been roaring for weeks that markets are in dire need of a correction and that market-makers are woefully short of stock and any sizeable buying produces exaggerated gains. They say the rot will set in when the Fed turns off the tap.
More... Market report brought to you in association with Killik & Co. For market advice check out killik.com FTSE CLOSE: Banking sector helps Footsie power on as Lloyds pass key break even markNerves became a little frayed on Thursday when Federal Bank official John Williams said: ‘Economic growth and an improving jobs market may persuade the central bank to begin to reduce its monthly bond purchases.’
Next week sees various US regional Fed Presidents speak about the economy and should they sing from the same hymn sheet as Williams, some nervy US fund managers could well decide to take some profits. Back home, the UK market was this week buoyed by retiring Bank of England governor Sir Mervyn King’s unusually bullish comments about the economy in his last Inflation Report.
King, who has been the City’s chief doom and gloomster over the past six years, said that Britain’s economic recovery ‘is in sight’ following the worst downturn since the depression of the 1930s. Interest rates will be remaining at historic lows of 0.5 per cent for another four years. If that’s the case, other than the stockmarket where else can fund managers put their clients’ money?
Financials were in the vanguard of the advance with state-backed banks in demand amid growing speculation that the Government could soon sell down their stakes. Royal Bank of Scotland, in which the UK tax-payer owns 81 per cent, jumped 18p to 336.8p. Lloyds Banking Group rose 1.93p to 62.84p, their highest for over two years and above the 61.2p break-even price.
Barclays joined in the fun with a gain of 6.4p to 326.85p. Reports of a pending upbeat circular and a regurgitation of US bid talk lifted US hedge fund giant Man Group 5p to 131.5p.
Continuing to reflect hopes for its crucial autumn/winter fashion range and ongoing bid speculation, Marks & Spencer rose 10.3p more to 451p. It’s make-or-break time for boss Marc Bolland with bookmakers saying it is odds-on that he will be gone by the end of the year.
Controversial Kazakh miner Eurasian Natural Resources was chased up to 310.9p after a report on FT Alphaville suggested that founding shareholders were prepared to bid 340p a share. A Bloomberg report some hours later stating that two of the founding shareholders had submitted a letter detailing an offer below £3 prompted an avalanche of selling. The close was 23.7p or 8pc down at 271.6p.
The prospect of a further long period of cheap mortgages and an improving UK housing market saw demand for housebuilders. Persimmon erected a gain of 66p at 1272p and Barratt Developments 15.9p at 346.3p.
Investors have really turned sour on Silver Spoon sugar group AB Foods after Suedzucker, Europe’s biggest sugar company, warned on profits. Shares of the UK group which also owns discount clothing giant Primark closed a further 39p lower at 1886p, making a two-day decline of 145p.
Tate & Lyle also remained friendless at 850p, down 11.5p.
Oil equipment services company Lamprell cheapened 9p to 169.75p. Dealers were unimpressed with the board’s proclamation that performance is ‘in-line with management expectations and it has made an encouraging start to the year’. They were disappointed to hear that discussions around the restructuring of the company’s debt facilities are ‘only’ at an advanced stage and are expected to be completed by the end of next month. A lot can still happen in that time.
Shrugging off its forecast that 2013 revenue will fall following restructuring and disposals, Vesuvius firmed 3.6p to 365.4p.
The molten metal flow engineering company said that trading has been flat this year and production of steel and foundry has been affected by difficult market conditions.
On a brighter note, the board continues to operate with a strong balance sheet and is maintaining its focus on working capital management.