FTSE flirts with all time high before falling back to earth – Friday close market report

24th May 2013

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The party appeared to come to close this week as the FTSE 100, after edging back towards its all-time-high, suffered its steepest one-day decline in a year writes Philip Scott.

The blue-chip index shed more than 2% on Thursday after the US Federal Reserve hinted at reducing its quantitative easing programme if US employment continues to improve. In addition, data showing a retraction in Chinese manufacturing worried international markets.

Japan’s Nikkei, index, after rising by circa 50% since the start of the year, also pulled back after the flash HSBC Purchasing Manager’s index (PMI)  – a manufacturing indicator for China, fell below the 50 point level to 49.6 – marking the first fall since October last year. The Japanese index closed on Thursday 7.3% per cent lower, its steepest trading session fall for more than two years.

The Nikkei managed to regain some ground on Friday, following the sell-off closing 0.9 per cent higher at 14,612.45 point

Commenting on the Chinese data, Mark Williams, chief Asia economist at Capital Economics said: “The reality is therefore probably not quite as bad as may first appear. But it is bad enough, with the economic slowdown apparently deepening after a weak first quarter.”

The Footsie closed on Friday, at 6,654.34, down 42 points on the day and 1% over the past week.

In the retail sector fashion chain Next, following a downgrade to “underweight” by Morgan Stanley, slipped 2% to 4,580p over the week, as the investment bank recommended traders swap it for Marks & Spencer. The group finished 5% higher at 475p, one of the Footsie’s biggest risers over the week, despite reporting a significant fall in profits, where profit before tax had slipped to £546.3m, down from £658m last year. However it also reported 1.3% rise in group sales. The highest riser was biotech group Shire, up 6% at 2,168p.

Despite an upgrade from broker UBS last Friday, the banking sector, along with other financials suffered some of the steeper falls over the week, with Standard Chartered down 5% to 1,537.5p. Lloyds Banking Group and HSBC each shed 4% to close at 60.08p and 726p respectively, while asset manager Schroders also down 4% at 2,432p per share. Barclays lost 3% to 317p, as did Royal Bank of Scotland to finish at 327p.

Next week sees market updates arriving from plumbing giant Wolseley and water group Severn Trent.

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