Greater London, England -- (SBWIRE) -- 01/07/2011 -- Head of Equities and CFD trading expert Giles Watts of City Index (http://www.cityindex.co.uk/)takes a look at the FTSE as it plays catch up with US and European equity markets.
“The FTSE 100 played catch up with US and European equity markets as investors saw the leading index power through 6000 level. Yesterday’s bank holiday saw the US European markets add nearly 1% and the FTSE lost no time in following suit as investors and traders returned to their desks after the festive break.
The index soared to heights not seen for over two and a half years as miners and banks drove the index to new highs. Record highs in Copper prices, buoyed by strong manufacturing data helped drive Xstrata and Fresnillo to the top of the FTSE leader board. The index was helped by a six percent move from BP, its best day in three months, as investors were cheered about reports that Royal Dutch toyed with a bid for the oil giant in the midst of its oil leak woes last year. The stock was further bolstered by reports that oil spill compensation payouts may be lower than expected.
Banks also came to the New Year party as euro zone worries seemed to fade at least for now, UK banks RBS and Lloyds benefitted most adding 4% gains. Investors seem more relaxed about the euro zone, despite the currency failing to make any material gains against the dollar.
For all the New Year cheer, some investors remain sceptical about the FTSE move. Many are citing the aggressive mark lower in Friday’s auction and the fact that the rally has been concentrated in a handful of stocks. Those that felt that Decembers rally was built on low volume remain cautious about the prospects for the markets at least in the near term.
Many expect the market to squeeze higher in the next few days and weeks before a correction to the downside seem inevitable. An early indication as to whether any correction will come sooner may be sparked by non farms this Friday, which as always will give an indication to the state of the US economy."
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