FTSE closes at two-month high despite light volumes
aBRITAIN’S FTSE 100 closed at its highest level in over two months yesterday, albeit in light volumes, as earnings from the US and Europe supported gains ahead of results from UK companies such as ARM and BP.
The blue-chip FTSE 100 closed up 0.9 per cent at 6,069.36, with volumes still thin after the four-day Easter weekend and ahead of another four-day holiday weekend starting with the Royal Wedding on Friday.
Index volumes were just 66 per cent of their 90-day average,
“Forecast beating earnings from both UBS and Ford have continued the positive theme emanating out of company earnings recently to support equity markets,” Joshua Raymond, market strategist at City Index said.
Technology stocks were a feature following recent results from US peers including Apple, and some upbeat broker comment.
ARM Holdings, which reports first quarter results today, rose 3.4 per cent as Citigroup raised its target price on the British firm in a preview of upcoming first-quarter results from European semiconductor groups.
Enterprise search software maker Autonomy added 0.6 per cent as Goldman Sachs, Investec, Canaccord Adams all raised their target prices for the firm, whose first-quarter results beat market forecasts on Thursday.
“Given the strong start to the year and correspondingly strong commit/backlog metrics, consensus expectations continue to look very conservative to us,” Goldman said in a note.
Of the 17 FTSE 100 companies due to report in the current quarterly earnings season, 18 per cent have already done so with 67 per cent missing estimates, with an average negative surprise of 1.1 per cent, according to Thomson Reuters data.
IT firm Micro Focus International jumped 6.8 per cent after saying it had received a takeover approach.
Slightly weaker were the miners, pausing following their strong performance over the last three sessions and ahead of the US Federal Reserve meeting yesterday.
The Fed’s quantitative easing programme has fuelled bumper gains for a range of commodities, so comments around the Fed meeting will be closely watched for hints it could tighten policy quicker than expected.
US consumer confidence rose in April as inflation expectations eased somewhat, a private sector report showed.
In the UK, integrated oils added the most points to the index with heavyweight Royal Dutch Shell up 1.2.
UBS named the oil major as a top pick in the sector on valuation grounds and remained positive on the prospects for the integrated oils share prices.
BP gained 0.8 per cent ahead of first-quarter results due today.
Drugmaker GlaxoSmithKline and UK bank Barclays, both due to report earnings in the next session, added 1 per cent each. International Airlines Group climbed 4.5 per cent as UBS named it the top pick among flagship carriers, saying shares in European airlines could rise if the oil price stabilised and recent trends in capacity started to come through.
Vodafone rose 2.3 per cent, adding around 8 points to the FTSE, rebounding from Thursday’s falls when the stock was hit after Dutch peer KPN cut forecasts.
The FTSE technicals suggested further index upside is possible, but the index has struggled to keep above these levels since mid-February.