Market Report: Footsie charges on to a high after blip
Friday 15 March 2013
Panic over! The FTSE 100 is on the march again. Time to stop hoarding tins, dusting off your gas masks and building makeshift shelters at the bottom of the garden. Armageddon is on hold, for now. Wednesday's mini wobble, led by ex-dividend stocks such as Standard Chartered, seemed light years away yesterday as the blue-chip index broke back through the 6,500 mark. European stocks also reached five-year highs as EU policymakers met in Brussels to dream up the region's latest rescue plan.
The FTSE 100 climbed 47.91 points to 6,529.41, while the wider FTSE 250 advanced 112.35 points to 14,084.
Angus Campbell, the head of market analysis at Capital Spreads, said: "Wednesday was nothing more than a momentary lapse in investors' concentration, a mere blip in the ever-continuing rally that has seen the FTSE burst back above 6,500 today and to its highest level since 2007. Equity investors continue to make hay whilst the sun is shining and despite the thin volumes there seems little that can halt the rally.
"Any retracement is met by a wall of buyers, as demonstrated once again yesterday and even though things look decidedly patchy for the UK from an economic standpoint, those globally exposed stocks are still well placed to generate good earnings for investors and pay them back with increasing dividend payments."
Temporary power supplier Aggreko led the charge after agreeing a $200m (£134m) deal to provide 122 megawatts of gas-fuelled power in Mozambique and Namibia over the next two years.
Shares in the company rose 126p to 1,965p.
Legal & General, the 177-year-old insurer, was also in demand after analysts at Barclays raised their target price on the stock from 166.4p to 180.8p.
"Legal & General's investment thesis is evolving," they said. "When the current chief executive, Nigel Wilson, joined in 2009, the initial focus was on cash. The focus in 2012 was to deliver cash and growth, and again L&G was successful.
"The third stage is to continue to deliver cash and growth, supplemented by M&A to accelerate the growth. L&G's ability to turn earnings into cash leads to a virtuous cycle of cash generation driving dividend increases and M&A."
The upgrade, which follows strong full-year results last week, boosted L&G shares by 4.6p to 173.6p.
At the other end of the table, miners such as Rio Tinto, Vedanta Resources and Fresnillo were on the slide amid concerns about the change of leadership in China, one source said.
Among the mid-caps, Home Retail Group climbed 16p to 148.9p after a solid trading update. Unfortunately for the retailer, analysts at Panmure Gordon were not that impressed.
"While this is a short trading period (8 weeks) being reported, it does beat expectations although we would not get too carried away with the fact that this is the third consecutive quarter of positive like-for-like sales growth at Argos," they said.
"We think that Argos's turnaround will take too long and that Homebase is heading towards losses. We also believe that many traditional retailers are making a virtue out of a necessity in that they have a lot of stores and so they are building bricks and mortar into an online model."
Shares in Latin American metals group Hochschild Mining fell 14.2p to 303.3p, hitting their lowest level since 2010 as analysts cut their target prices on the stock.
Société Générale, which has a sell rating on the company, reduced its target price to 300p from 330p.
Royal Bank of Canada analysts also cut their target price to 420p from 460p.
"We believe that concerns about the potential for permitting delays generate the main short-term headwind for the share price," they added.
Elsewhere, news emerged that John Craven, the serial energy entrepreneur, is planning to return to the market with Falcon Oil & Gas, an explorer with activities in Australia, South Africa and Hungary.
The company announced it had applied for admission to London's AIM and the Enterprise Securities Market of the Irish stock exchange. The flotation would raise £16.9m through the issue of 120.3 million new shares at 14p each, the group revealed.
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