FTSE 100 reaches its highest level for three years
London blue chips surged to a three-year high yesterday as investors took heart from the latest US economic figures which suggested that growth in the world's largest economy is continuing.
London blue chips surged to a three-year high yesterday as investors took heart from the latest US economic figures which suggested that growth in the world's largest economy is continuing.
The FTSE 100 index rose 32 points to 5,077.6, its highest level since June 2002, after consumer sentiment figures from the University of Michigan topped analyst expectations. The consumer sentiment index rose to 94.8 from 89.9 in May. Forecasters had expected it to rise to just 88.6.
Stock-market professionals also said the FTSE 100 had been boosted by "certain technical goings-on" that sometimes accompany the quarterly expiry of futures and options contracts which took place yesterday. In the minutes up to the 10.15am quarterly expiry of these financial derivatives, heavyweight stocks such asBP, Vodafone and HSBC registered a jump in their values.
Brokers attributed this to an attempt by those holding bull positions in FTSE-100 futures to drive the value of the blue-chip index higher and thereby make the derivatives they own worth more in the few minutes before they expire. One broker said: "By pushing the big blue chips like GlaxoSmithKline, BP and Vodafone higher you inflate the value of the FTSE 100. This can mean that certain futures contracts which were worth nothing are suddenly worth quite a lot of money."
In the US, although the Dow Jones roseon the back of the bullish University of Michigan data, stocks were hit by the latest trade figures which revealed a wider-than-expected US current account deficit.
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