Closing comments from Tim Hughes, Head of Sales Trading, IG Index:
It looks like being a fairly flat finish for UK stocks as we go into the final minutes of the trading day.
Today's main event was the interest rate announcement by the Bank of England. Some of the downbeat news out yesterday for the economy had raised hopes in some quarters of a rate cut. However, as broadly expected, the Bank chose to stay put for this month. This cautious approach to rate cutting is a contrast to how the Fed have acted in the US. But with the economic outlook likely to remain somewhat gloomy for at least the short term, it does mean the Bank should have plenty of flexibility in reserve for the months to come. As ever, it will be the minutes released in a couple of weeks time that should give more of an indication as to if and when the next cut is coming.
The broader stock market continues to hold up well. The FTSE 100 remains firmly above 6200 and has made a few runs through the 6250 mark which many view as the current short term obstacle. Although it has been a somewhat quieter day's trading it still looks too early to call the end of the recent rally. Traders should not be surprised to see a test of 6300 in the days to come.
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
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UK Market Comment, 7 May
Closing comments from Anthony Grech, Market Research Analyst, IG Index:
As we head into the final hour of trading the FTSE 100 Index is continuing its positive run and hitting a four-month high, brushing aside rumours that the Fed may raise interest rates.
Wall Street shuddered a little on the news, along with concerns over crude oil prices and consumer spending, with the Dow Jones opening lower as traders considered the Fed's plans to curb inflation. However, the FTSE 100 added 0.7% by lunchtime, buoyed by upbeat first quarter results from Imperial Tobacco and British American Tobacco, while booming oil prices helped major producers BP and Royal Dutch Shell advance. Other winners included construction firm Persimmon, which made gains despite recent falls in interest from investors in the housing industry.
Small targets are continuing to be met by the FTSE 100 as it baby-steps its way back from the credit crunch-fuelled lows of earlier this year. Today saw the 6250 mark breached as the FTSE in particular seems to have grown a thick skin with regards to negative news from across the pond. With investors still in a positive mood despite concerns over inflation in the US, and UK market levels now similar to early January, stocks seem to be suggesting the darkest period is over. However, with oil prices now sitting above $122 and weak consumer spending already an issue Stateside, it may just be a matter of time before the lack of any real positive news weighs back down on the FTSE.
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
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'UK Market Trading' by AG, updated 08-May-08
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