Banks and retailers rally to steer the FTSE 100 ahead
GAINS in banks and retailers outweighed weakness in energy stocks and drugmakers yesterday to leave the FTSE 100 up by 0.1 per cent, or 4.51 points, at 4,416.23. Trade was thin with just 67 per cent of the average of the last 90 days of trading transacted with the absence of concrete data on the UK market meaning moves were muted.
“There’s been a struggle for direction, and even though there’s been no negative news and oil is holding near $63 per barrel, the positive sentiment around when the market rallied in March has gone,” said James Hughes, market analyst at CMC Markets.
Banks added the most points to the index as sentiment on the sector was bolstered by US data on Tuesday that showed the biggest jump in consumer confidence in six years.
Barclays, HSBC and Standard Chartered added between 0.3 and 2 per cent. But Lloyds Bank Group and Royal Bank of Scotland fell 2 and 2.5 per cent respectively.
Other financial stocks were also in demand, with hedge fund manager Man Group up 5.4 per cent and insurer Aviva climbing 1.2 per cent.
Oil and gas producers were the biggest drag on the index despite the robust crude price as investors were nervous ahead of an OPEC meeting today. Royal Dutch Shell dropped 1.2 per cent, BP slipped 0.1 per cent and BG Group shed 1.7 per cent.
Shell said it planned to restructure operations to cut costs, dividing its core exploration and production business into a North and South American unit and a non-American one.
Sales of existing homes in the United States rose 2.9 per cent in April, a survey showed, supporting views that the three-year housing recession was near a bottom.
In the UK, supermarkets performed well as market researchers TNS WorldPanel said the grocery market grew at 5.8 per cent in the 12 weeks to the end of May.
Morrison, Tesco and Sainsbury added 1.5 to 2.8 per cent.
As some risk appetite returned, defensive stocks also fared poorly, with British American Tobacco losing 1 per cent and drug makers AstraZeneca and GlaxoSmithKline down 2.1 per cent and 0.2 per cent respectively.
Marks & Spencer, Cobham and Next fell after trading ex-dividend.
On the economic front, the pace of decline in Britain’s services sector looks set to slow over the next three months helped by falling costs, a survey by the Confederation of British Industry showed.