Market Report: The Footsie's fight to end the year above 6,000
Friday 31 December 2010
The likelihood of the FTSE 100 finishing 2010 above the 6,000 point mark took a hit yesterday, as the year's last full session of trading finished on a negative note. Despite almost touching 6,010 close to the start of proceedings, for most of the day the blue-chip index found itself heading south before closing on 5,971.01, a fall of 25.35.
Even the latest unemployment figures from the US, which showed jobless claims were at their lowest for more than two years, failed to prevent the index suffering a second consecutive day on the slide.
Unsurprisingly for this time of year, volumes were quiet, with City Index's Joshua Raymond pointing out that many traders were "eyeing their New Year's Eve parties... rather than any stock-picking".
In the absence of much significant corporate news to provoke shifts ineither direction, it was left to commodoties to propel the main movers.Although gold fell back as the dollar moved up, silver stayed near a high level and, as a result, Fresnillo found itself at the summit of the leaderboard, surging up 42p to 1,661p.
Many of the other miners were also enjoying gains, with Anglo American rising 10.5p to 3,386p, despite declaring force majeure on its Queensland coal mines, citing the disruption caused to both transportation and production by the recent flooding in the Australian state. Not everyone in the sector was quite so cheerful, however, as African Barrick Gold and Randgold Resources – Wednesday's top two performers – lost 7.5p to 611p and 130p to 5,315p respectively.
Some of the big energy companies were also struggling. With crude oil prices declining slightly during the day, BP was driven back 2.15p to 471.2p and BG Group was down 11.5p to 1,320p,although Royal Dutch Shell managed to edge up 3p to 2,154p.
All three are in competition over a 20-year contract to provide Cyprus with liquid natural gas. Yesterday, the country's energy ministerAntonis Paschalides said that its state gas group Defa had concluded talks, although he would not reveal the identity of the company that had been recommended. However, there have been a number of media reports from the country that say Shell will be announced as the victor.
Meanwhile, defensive stocks were falling out of fashion as those few investors who were not still on their break decided to reintroduce a bit of risk into their portfolio. Guinness producerDiageo slid 11p to 1,200p, while National Grid dropped 3p to 564.5p and Unilever eased back 9p to 1,986p.
It was a mixed day for the retailers on the FTSE 250, despite the release of two bits of positive data for the sector. In Europe, retail sales saw their steepest gains for more than 30 months, according to Markit's latest PMI survey, increasing 1.6 to 52.9 in December. Meanwhile, the outlook for the post-Christmas period – which has been made even more vital after the extreme weather that disrupted so many festive shoppers – was boosted by John Lewis;s revelation that sales had risen by more than 25 per cent in the first three days.
The update was welcomed by Howard Archer, IHS Global Insight's chief UK and European economist, who said it "supports the view that early sales activity will be robust this year for a number of reasons".
However, Mr Archer did sound a warning, saying that while "consumers will be keen to take advantage of genuine bargains, it may well be that sales activity tails off once the best of the bargains have gone".
Still, Debenhams managed to lift 0.2p to 71.75p and Sports Direct booked gains of 1.4p to finish on 161.6p. Less well off, however, was Dixons Retail, losing 0.27p to finish on 22.82p.
Another faller on the mid-tier index was Colt, with the telecoms company shedding 5.4p to 129.3p. It announced yesterday that Mark Ferrari – managing director of the privateequity company Devonshire Investments, and a non-executive director of Colt – will take on the role of chieffinancial officer next March.
Among the small-cap companies, Pro-Strakan was going strong after winning approval for one of its drugs in the US. The pharmaceutical group – which soared 15.75p to 105p – was given the green light by the Food and DrugAdministration to sell its testosterone product Fortesta in the States.
On the Alternative Investment Market, Berkeley Resources shifted 2.5p down to 113p, following its announcement that it had failed to reach an agreement with Severstal over a bid from the Russian group. However, the two companies are still talking after analternative proposal was submitted by Severstal.
There was a surge of more than 23 per cent for Regency Mines, as the miner – which has projects in Australia and Papua New Guinea – posted its first profit. The company's final results saw a pre-tax profit of over £600,000, which is an improvement of more than £1.3m from the year before, and as a result it was bumped up 1.35p to 7.2p.
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