A rally in the banking shares assisted Britain’s FTSE 100 rise close to a 2 month peak last week as investors optimistically welcomes the possibility of less stringent rules regarding leverage for the said sector.
Supermarket WM Morrison was the top gainer in terms of FTSE on speculation that it might sell several of its properties and return some of the proceeds to shareholders all the while as gas and oil engineering firm Amec was bolstered by an expansionary agreement to purchase its rival, Foster Wheeler.
Banks all rallied as one after regulators watered down the rules for the calculation on how much capital bank must take hold of in their loans as well as other assets in order to keep a firm hold of the global economy being financed. It’s basically all about the banks; the lacklustre regulations are really improving investor sentiment in the sector.
WM Morrison, increased its FTSE to 6 % after media reports showed weaker than expected Holiday sales, was under direct pressure from investors to sell part of its property portfolio in order to free up cash to return to shareholders.
Volume on Morrison’s stock was four times its usual full-day average for the past three months as compared to its 70 % average in terms of FTSE.
AMEC was the second-top gainer which added 2.9 % following its agreement to acquire another company in the condition that it will expect to double its revenues in the expanding markets such as in the Middle East and Latin America.
The acquisitions were considered highly accretive in value and raised its target for the said company which was considered a confirmation of its recommendation to consolidate the same.
Energy shares tracked crude prices much lower as international deal on Iran’s nuclear programmes were regarded as potentially paving the way for a lifting of the sanction imposed on the country, bringing it back once again into the global market.
Defensive pharmaceutical and utilities shares were also taken into consideration as investors exchanged sectors that would provide for more exposure to emerging European economic recovery such as the banking sectors and the automotive industry.
The FTSE has risen approximately 4 % in the past six months as compared with the 11 % rise for the pan-European FTSEurofirst 300, due to the British index’s higher weightings in defensive sectors and in shares that are dependent on commodity prices of which they had mostly fell in recent months.
Here we see several new opportunities in continental Europe according to several strategists, with FTSE target of 7,400 for the year but the odds are there isn’t going to be a much better performance until a wider European area emerges.