London Report: Corporates push up FTSE despite ECB and Russia
BRITAIN’s top share index edged higher yesterday, buoyed by updates from Aviva and Aggreko, although lack of action by the European Central Bank (ECB) and uncertainty over Ukraine capped gains.
Equities in London tracked Eurozone stocks lower, after ECB president Mario Draghi offered no new measures to boost lending in the region. Speculation that he would had boosted European stocks in early trade.
“We’ve been surprised by the sharp move lower in equity markets during Draghi’s speech, but it appears bulls have been disappointed by a failure to commit to further liquidity measures in the short term,” said Matt Basi, a senior sales trader at CMC Markets.
The FTSE 100 was up 13.07 points, or 0.2 per cent, at 6,788.49 at the close. It was up 0.3 per cent before Draghi’s press conference.
A spate of bullish earnings reports supported the index.
Insurer Aviva rose eight per cent to the top of the FTSE 100 after the company said operating profit rose six per cent in 2013 and that it was proposing a final dividend of 9.4p per share.
Fund manager Schroders gained 5.3 per cent following its higher-than-expected pre-tax profit growth for 2013. Aggreko, the world’s biggest temporary power provider, climbed 3.5 per cent after saying it would return £200m to shareholders.
Events in Ukraine also put pressure on the index. The latest move came when the Crimean parliament voted to leave Ukraine and join the Russian Federation, raising the stakes in the worst East-West confrontation since the Cold War.
The FTSE fell 1.5 per cent on Monday after Crimea was effectively seized by Russian forces at the weekend. It more than made up the drop on Tuesday, as Russian President Vladimir Putin played down the prospect of war.
“We bounced too strongly on Tuesday… and now this vote in favour of Russian sovereignty puts a spanner in the works and delays the resolution of the situation further,” said IG analyst David Madden. “The prospect of a war is declining, but the situation is far from over.”
Technical analysts were unsurprised that the market could make only limited gains, but they said that a steady performance was healthy in the medium term and should support a future rise. “As long as 6,640 holds as a support, a new up leg is likely towards the swing high area around 6,865-6,875,” said Trading Central’s Nicolas Suiffet.