FTSE Continues to Rise but Sterling Stumbles
The FTSE was driven today by news of increased job growth in the US and positive feelings around the Eurozone. The index had risen 21.5 points by the close of play on Monday. Much of the growth has stemmed from Friday’s job report in the US, however the confidence instilled in investors by Mario Draghi’s promise to drag the Euro out of its current plight has also been a major contributor. The statement from the President of the European Central Bank has already encouraged borrowing costs for Spain, Italy and Greece to be slashed. Spain is still to confirm whether they will be requesting a “full-blow bail-out”.
The Euro gained on the Sterling, as did the US Dollar, closing at 1.25 and 1.56 to the Pound respectively.
Marks & Spencers performed well, with a rise of 6.6p, as it was rallied by talk of a £6bn takeover. The speculation was further fueled when various banks announced that they would consider funding any potential bids with debt finance. The real winners of the day, however, were the bankers themselves. Barclays put their recent woes behind them with gains of 5.9p, while the Royal Bank of Scotland increased by 12.8p – following on from a staggering 6% rise on Friday.
Water suppliers had a rough time after Sir Ian Byatt, former chief of Ofwat, slammed the industry and its regulators for focusing too much on quality, rather than price. Pennon Group, owners of South West Water, saw a fall of 11p on the back of these remarks while Severn Trent dropped by 20p.
HMV’s torrid time continued as they lost the services of their head of finance, David Wolff, just under a week after the departure of Simon Fox, their chief executive. This compounded the common belief that the group would fail to meet its conservative targets and announce losses of around £16m for the year. Many now feel the group will not be able to turn a profit for the financial year. Some analysts have gone as far as to claim that the company will cease trading in the near future due to the popularity of digital media consumption and the company’s failure to adapt. The stock price fell by 0.1p, closing at 3.5p.