BRITAIN’S top share index rose for the eighth straight session yesterday, led by G4S on talk of a bid for one of its businesses in a market supported by the prospects of US monetary policy remaining ultra-loose for longer.
G4S rose 3.5 per cent, a top riser, after a report that British private equity group Charterhouse Capital Partners was considering a £1bn offer for G4S’s cash solutions business.
The FTSE 100 index closed 31.62 points higher, up 0.4 per cent to 6,654.20, and is around 2.7 per cent off May’s closing high for the year, which was a 13-year peak.
The index has risen around 5 per cent in the last seven days after hitting its lowest since July, with demand supported by expectations the Federal Reserve will keep its stimulus in place for the time being following the US fiscal standoff.
The index extended gains in the afternoon after US data showing slowing house sales, supporting the view that the market anticipates continued easy monetary policy to counteract recent economic uncertainty.
“All eyes are back on the ‘will they, won’t they’ question of Fed tapering, and I think the likelihood is that they don’t taper this year,” Joe Rundle, head of trading at ETX Capital, said.
“They won’t taper while they’re worried about the shutdown effects, and we’re back to the situation where bad data is good and good data is bad.”
The housing data was the first in a flood of US data this week, delayed by the 16-day government shutdown, with particular market focus on jobs numbers due out today.
Fund flow data backed up the view that equity-friendly central bank bond purchases would continue to support the asset class, as equity funds posted their biggest weekly inflow since mid-third-quarter 2011, according to EPFR data.
The start of the earnings season has also delivered support to equities, with 63 per cent of firms in Europe that have reported so far beating expectations.
“Earnings remain positive and trends on forward looking estimates suggest we have scope to move higher on inflows on improving investor sentiment,” said Atif Latif, director of trading at Guardian Stockbrokers.
RBS was the top faller, down 5.3 percent amid uncertainty over the future make-up of the part state-owned UK lender. A Daily Telegraph report on Friday said George Osborne was considering breaking up the bank.