FTSE edges up to secure fresh post-crisis high

SOLID corporate earnings helped push the UK’s top share index to a fresh five and a half year closing high yesterday, led by EasyJet after a robust update.

The UK benchmark ended up 7.49 points, or 0.1 per cent, at 6,693.55, its highest close since October 2007.

Easyjet and exchange operator London Stock Exchange were bolstered by estimate-beating updates, notching up respective gains of 8.3 per cent and 5.3 per cent.

Traders said the positive earnings news was very much the focus on a day otherwise marked by gloomy economic data from the Eurozone, which contracted in the first quarter.

Technical analysts remained bullish on the index, which has just recorded its tenth consecutive day of gains.

“You can’t fight the trend,” said Lynnden Branigan, technical analyst at Barclays Capital, who has 6,754, the 2007 peak, as an initial target.

David Buik, market commentator at Panmure Gordon noted that trading volumes were low. “Volumes have been derisory with 418 million shares changing hands on the LSE,” he said.

The FTSE has risen 7.5 per cent in the past month as pledges of continued monetary stimulus from global central banks, and especially the US Federal Reserve and European Central Bank, underpinned investor appetite for risk assets.

Neil Veitch, investment manager at SVM Asset Management, reckoned the market would grind higher into the year-end, but has cut exposure to defensives which have led the rally in 2013, perceiving them to be fully valued.

He has been switching into more cyclical stocks – most recently International Airlines Group.

While technical momentum indicators such as the relative strength index show the FTSE 100 is in ‘overbought’ territory, fund managers see scope for more gains as investors continue to plump for equities over bonds due to better returns.

“That trend is not showing any signs of abating,” said Miton fund manager George Godber, referring to the greater lure of equities.

Godber, manager of the CF Miton UK Value Opportunities Fund, stressed the importance of being selective in stock picking, with ITV and Sainsbury among stocks he owns.

The FTSE 100 trades on a 12-month forward price/earnings ratio of 12.31 times, according to Thomson Reuters data. “The markets generally are actually looking quite good value still,” said Leigh Himsworth, head of UK equities at City Financial and manager of the CF Eden UK Select Opportunities Fund.

A fall in the value of stocks trading without the attraction of their latest dividend, including oil major Royal Dutch Shell exerted pressure on the index to the tune of 9.59 points.