HSBC, Glaxo push FTSE back near 13-year highs
Reuters in London
Britain’s benchmark equity index rebounded back towards near 13-year highs on Tuesday, led by gains in heavyweight bank HSBC and pharmaceuticals group GlaxoSmithKline.
While some traders felt a near-term pullback was possible, many said the equity market’s longer-term upwards trend remained intact, buoyed by pledges of monetary stimulus from major central banks.
The blue-chip FTSE 100 closed 1.6 per cent, or 107.67 points, higher at 6,762.01 points.
The FTSE hit its highest level in nearly 13 years last week but then fell 2.7 per cent in two days after the US Federal Reserve said it was considering exit strategies from its economic stimulus programme.
The Bank of Japan and European Central Bank, however, have indicated in recent days that they plan to maintain stimulus and that has helped reassure investors.
Darren Easton, director of trading at Logic Investments, advocated using days when the market fell to buy up stocks at relatively cheap prices, rather than placing “short” trades to bet on a more prolonged market fall.
“I think there are a lot of traders who are worried about going ‘short’ right now. There are investors out there who were waiting for a dip and have now moved in to buy,” he said.
HSBC and Glaxo added the most points to the FTSE 100. HSBC recovered from a 2.1 per cent fall on Friday to rebound by 2.4 per cent while Glaxo rose 1.9 per cent after Deutsche Bank upgraded the stock to “buy”.
The market was closed on Monday for a public holiday.
Brown Shipley fund manager John Smith said both HSBC and Glaxo were among his favoured stocks, with the two seen as relatively “defensive” given their diversified set of earnings from a broad range of economies and solid dividend payouts.
“HSBC is benefiting from its exposure to an economic recovery in the United States, and we also like consumer goods stocks such as Diageo, and BAT (British American Tobacco) along with Glaxo,” said Smith.
Smith was wary of adding to equity positions at current levels, adding he would look to take profits on the rally so far, with the FTSE up 15 per cent since the start of this year.
Easton, however, saw few obstacles preventing the FTSE from hitting a record high of 7,000 points if it quickly resumed to trading back above the 6,800 point level.