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FTSE higher amid mixed news - Latest Market Analysis

A raft of European economic news was released prior to the market open; Augusts’ PMI surveys were potentially significant given recent volatility surrounding the troubled region. Euro-wide Manufacturing and Services PMI came in ahead of expectations at 49.7 and 51.5, however the former demonstrated a contraction in manufacturing activity not seen since 2009. Whilst Manufacturing and Services PMI both grew within Germany, they did so at the slowest rate for over two years. The worrying data showed that the growth engine of Europe is struggling to offset a third monthly decline in the more peripheral nations of the 17 member bloc. French Services PMI surged to 56.1 from a 53.5, brightening the picture somewhat. Given that the data could best be described as mixed, markets seemed undeterred and indices across Europe saw gains, the FTSE 100 quickly up around 100 points although it stabilised closer to 1% for much of the morning.

G4S sat atop the leader board, the security services group buoyed by a 3% rise in first-half profits and a positive growth outlook for most of its major markets. The shares rapidly gained around 17 points but pushed higher to finish the day up 8.5% at 264.4p. ARM holdings was another significant gainer, which put on 4.6% after the Autonomy-HP deal of last week reignited suggestions that it may be a takeover target for a big US technology company such as Apple or Intel.

The precious metals miner Fresnillo, recently noted for its strong performance in response to the gold price, bucked the trend today with a 7.2% fall despite gold making a new all time high above $1900 overnight. The decline was in response to 1H results that were slightly lower than expected but still described by many analysts as strong.

The FTSE gradually lost ground throughout the afternoon with the spot gold price within sight of its new all time demonstrating wary risk sentiment. News from the US showed new home sales fell 0.7% in July, the seasonally adjusted annual rate of 298,000 was the lowest level in 5 months and below analysts’ forecasts of 315,000. The data continued to paint a gloomy picture for the US housing market, yet stock markets did not react negatively to the news. The S&P and DJIA maintained their 1% plus gains, boosted by the possibility of further Federal Reserve stimulus which is anticipated to be announced at the Jackson Hole symposium later in the week. The expectations also led to dollar weakness, the Greenback losing around 0.3% against Sterling and the Euro, which itself boosts commodities which are denominated in dollars.

The FTSE 100 closed up 34 points at 5129, a 0.7% gain that saw it underperform its European counterparts the CAC 40 and DAX which both put on 1.1%.

This was posted in Bdaily's Members' News section by John Dance .