MARKET REPORT: FTSE 100 holds gains after inflation cools
The FTSE 100 posted its best weekly performance since March as better-than-expected inflation data in the UK fueled hopes that interest rate hikes will not be as wide as feared.
On a day of modest gains, the blue-chip index rose 0.2 percent, or 17.68 points, to 7663.73.
It meant the FTSE 100 is up 2.84 percent this week, a feat not seen since the last week of March at 3.06 percent.
The rally came after official data on Wednesday showed inflation fell more than expected, from 8.7 percent in May to 7.9 percent in June. That raised hopes that the Bank of England could opt for a smaller rate hike next month.
London’s second level ended the week in the red as the FTSE 250 fell 0.6 percent, or 111.28 points, to 19,200.45. But the mid-cap index is up 4.01 percent this week, marking its best performance since the end of October last year, when it rose 4.13 percent.
Boost: The FTSE 100 is up 2.84 percent this week, a feat not seen since the last week of March at 3.06 percent
Richard Hunter, head of markets at Interactive Investor, said traders had reacted to “potentially improving conditions in the UK.”
But he also pointed to further testing next week when British banks start reporting half-year results that will provide more clues about the outlook.
There was also a rise in oil prices following pledges by China to boost sales of cars and electronics with the aim of reviving sluggish demand in the world’s second-largest economy. A barrel of Brent crude rose 1.5 percent to more than $80 a barrel.
That helped BP increase by 0.8 percent or 3.55p to 475.8p, while Shell added 0.9 percent or 22.5p to 2418p.
Elsewhere, there was further pain for AMTE Power at the end of a rough week.
Sky News reported that the government has rejected calls from the Scottish battery cell manufacturer to step in and provide the necessary funding.
It came as AMTE warned this week that it could fall under administration and its shares would be suspended from trading on AIM unless new funds were raised.
Shares fell 14.3 percent, or 0.62 pence, to 3.75 pence.
Babcock rose 4.4 percent, or 15.8 pence, to 377.4 pence, a day after the defense group issued optimistic outlook and announced it will reinstate a dividend.
It was a positive end to the week for Hargreaves Lansdown after broker Jefferies upgraded its rating for the stock from “buy” to “underperform” and raised its price target from 800p to 1015p.
The investment platform said on Wednesday that new clients invested £1.7 billion in the three months to the end of June – 6 percent more than the previous quarter.
Shares rose 1.9 percent, or 17 pence, to 927 pence. Glencore became the latest heavyweight miner to update the market following the results of Antofagasta and Rio Tinto earlier this week.
But only the group’s cobalt and gold production rose in the six months to the end of June, while copper, coal and zinc production declined.
Glencore has hoped for a better second half of the year and reiterated its guidance for the full year.
Shares rose 0.01 percent, or 0.05p, to 472.55p.
Bus and train operator First Group proposed a new share buyback program of up to £115 million as it appeared to return money to investors.
The company has so far paid out £70.9 million from the £75 million buyback program it launched last December.
It also said trading in the new fiscal year, which began March 26, was in line with forecasts, despite continued union action by workers.
The company’s shares added 3.1 percent, or 4.5 pence, to 149.8 pence.