FTSE rallies but outlook still unclear

Kasmira Jefford
Follow Kasmira
AFTER a week of some of the most volatile trading since the crash of 2008 -- following the US credit downgrade, rumours swirling around French banks and concerns over the Eurozone debt -- most analysts are reluctant to predict where the FTSE 100 will be by end of year.

The FTSE 100 index jumped by 155 points yesterday, closing up 3.1 per cent at 5,162.83 as fears over European banks eased, but only after wild swings that saw the index drop below the psychologically-important 5,000 mark again.

Strategists at Morgan Stanley, who had been among the most bullish about the FTSE’s prospects, said they have suspended their target of 6,400 points for the end of the year because of the recent choppy market conditions, and expect the FTSE to dip back below 5,000 in the coming months.

Keith Skeoch, chief executive of Standard Life, was more hopeful, saying earlier this week that “there is scope for a significant rally” given the good shape of the corporate sector.

But he added that the value “would not be fully realised until the current nervousness surrounding policy leadership and the wider economic environment eases.”

One bullish trader reckoned that the FTSE could end the year “probably around the 5700-mark”.

Societe Generale’s Claudia Panseri, who also supported the view said: “FTSE should trend above the current level” by the year’s end.