Market Report: Profits taken but banks are backed

Day traders appeared to be taking profit from the recent surge in the share prices of the UK's banks today, but the City's fund managers are backing the banking sector for the first time since 2007. A trusted fund manager survey by Bank of America Merrill Lynch today declared that global investors have now shifted their stance on financial stocks, the first time since February 2007.

The change is evident in the share prices of Lloyds Banking Group and Barclays. Lloyds, which edged down 0.55p to 54.37p today, is up more than 9 per cent since the beginning of the year and was last year's best-performing stock. Barclays, down 3.5p to 295.4p today, is up more than 7 per cent since the start of 2013.

Investors are keen on banks but still view them as the equity market's most undervalued sector, Merrill's survey suggests.

Banks will begin to move into further focus today as the United States' financial reporting season kicks off with JPMorgan and Goldman Sachs, followed by Citigroup and Bank of America tomorrow. the UK banks' reporting season starts next month. Banks have been in favour due to the relaxation of liquidity rules but Merrill Lynch's report also found asset allocators assigned more funds to equities than at any time since February 2011. Confidence in the world's economic outlook has reached its most positive level since April 2010 and appetite for risk is now at its highest in nine years. An increasing number of those surveyed reckon equities are undervalued, particularly in Europe.

A favourite for punters today was British fashion brand Burberry. It sashayed up the top-flight index when it revealed forecast-beating third-quarter results on the back of strong Christmas sales. Its shares rose 61p to 1,386p. But some early sellers have lost out. Angus Campbell, the head of sales at Capital Spreads, said: "Clients were really bullish on Burberry throughout December, but in the new year they repositioned themselves with a slightly more bearish stance. Buyers and sellers of the stock were split 50/50."

These results, and others, helped to boost the blue-chip index. Investors were concerned about further issues with US fiscal policy and the benchmark index dipped in afternoon trade, only to pick up again later to close up 9.45 points at 6,117.31.

UBS's analysts were keen on publisher Pearson and the shares gained 39p to 1,221p. The Swiss bank's square-eyed scribblers also rated shares in ITV. They claimed the TV ad market is having a better start to the year than expected. UBS's Tamsin Garrity increased her ad assumption for this year by 3 per cent, up from zero.

Not only is the ad market better, ITV has benefited from a spat involving rival Channel 4 and Sir Martin Sorrell's media giant WPP. Channel 4 and its biggest advertiser have now kissed and made up but Ms Garrity said the "deal delay" helped ITV to outperform. The shares were up 0.7p to 112.4p.

Bid rumours re-emerged for BG Group. The gas group lost about 30 per cent of its share price last year after it admitted production declines. Analysts think the stock looks cheap and vague bid rumours have surrounded it for months. The shares ticked up 25.5p to 1,073.5p. Microchip designer Arm Holdings suffered after the sell-off of Apple shares following reports of weaker-than-expected demand for the new iPhone 5, where some of its chips are used. Analysts at Morgan Stanley and Investec downgraded the stock and it ended near the bottom of the benchmark index, down 32p to 841p.

Keeping it company was miner Anglo American. It announced its platinum subsidiary Anglo American Platinum has slashed platinum output from its mines driving the white metal's price to three-month highs.

Its shares dug down 75.5p to 1,961p as rumours circulated that it will be subject to regulatory checks and fines. But the move helped mid-cap miner Lonmin, up 13.4p to 346p, and Aquarius Platinum put on 7p to 72p.

Online supermarket Ocado reported a rise in sales and the shares lifted 0.4p to 84.5p but remain way below its 2010 flotation price of 180p.

Small-cap index equipment hire group Lavendon's shares jumped 14.75p to 159.25p after it said its full-year results would be at the upper end of its expectations.

Life and Style
A teenager boy wakes up.
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
Life and Style
food + drink
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Life and Style
Arts and Entertainment
A still from Duncan Campbell's hour-long film 'It for Others'
Turner Prize 2014
Arts and Entertainment
Tony Hadley in a scene from ‘Soul Boys Of The Western World’
musicSpandau Ballet are back together - on stage and screen
Arts and Entertainment
From left to right: Ed Stoppard as Brian Epstein, Sheridan Smith as Cilla Black and Elliott Cowan as George Martin in 'Cilla'
tvCilla review: A poignant ending to mini-series
Life and Style
Bearing up: Sebastian Flyte with his teddy Aloysius in Brideshead Revisited
lifePhilippa Perry explains why a third of students take a bear to uni
Arts and Entertainment
Sir Alan Sugar appearing in a shot from Apprentice which was used in a Cassette Boy mashup
artsA judge will rule if pieces are funny enough to be classed as parodies
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

SQL Developer (Stored Procedures) - Hertfordshire/Middlesex

£300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style