FTSE clings on to upward trend with a new peak

BRITAIN’S top share index edged up to fresh peaks yesterday, with the market at a five-and-a-half year high, and traders said a backdrop of central bank support would keep its upward trend intact.

The blue-chip FTSE 100 index closed up 0.1 per cent, or 9.26 points, at 6,592.74 points – its highest level since early 2008.

The FTSE 100 has risen around 12 per cent this year, boosted by injections of liquidity and interest rate cuts by world central banks, shrinking bond yields. this has driven investors to the better yields on offer in equities.

“The FTSE seems to be stabilising at these levels, but with the upward trend still intact,” said Spreadex trader Max Cohen.

Credit data company Experian gave one of the biggest lifts to the FTSE with a 6.4 per cent rise that topped the market’s leaderboard, despite a 36 per cent drop in pre-tax profit. Reports of a share re-purchase programme, and an increase in full-year dividends by nine per cent, were enough to whet the appetite of yield-hungry investors, according to analysts.

JN Financial trader Rick Jones said some might look to sell shares at current levels in order to book profits on the rally. That could push the FTSE down to 6,480 points, but he said the index then would probably soon recover to 6,630 points.

“I wouldn’t be trying to call the top of the market here. It’s very difficult to stay short of the market because of all the central bank intervention,” he added.

Technical analysis charts showed the FTSE could meet some resistance at around 6,610 points. HSBC strategist Robert Parkes also said UK stocks looked attractive on valuation grounds.

According to Thomson Reuters Starmine data, the UK stock market has a forecast average price-to-earnings per share (EPS) ratio of 12.3 times for the next 12 months – a slightly cheaper multiple than the 12.7 times ratio for the pan-European STOXX 600 index.

UK equity markets also had a plethora of mostly poor corporate earnings and trading updates to contend with, and stayed largely flat with little reaction to the Bank of England (BoE) decision to leave rates and quantitative easing unchanged. “Any future policy changes now look likely to be left to the incoming governor in July,” said Brenda Kelly, senior market strategist at IG Group.

BT’s announcement that it will offer new channels for free to existing broadband customers sent shares in competitor BSkyB sharply downwards with shares losing over seven per cent, trading at a three-and-a-half month low.