Member Article

FTSE100 multi-month highs following bailout sign-off, economic data

Sentiment was clearly aided today by a number of factors, foremost of which was the approval of the second bailout package for Greece, and the region may get the first tranche (€5.9 billion) of its €130 billion bailout package this month. A German ZEW economic sentiment index for March also lifted the mood, with results coming in at 22.3 ahead of the expected 10 and a previous reading of 5.4. The data is complied form a group of 350 German institutional investors and analysts, with reference to their six-month economic outlook, and was at its highest levels since July 2010. If provided the positive tone for the morning, which was subsequently supported by US retail salesdata that showed a 1.1% increase in February, in line with forecasts and ahead of a 0.6% increase in January.

Equity indices in Europe were roughly 1% higher, with those in the US opening around 0.5% better off in early trade, and most hitting new highs throughout the afternoon. The news damped demand for safer investments, and as such government bond yields of the UK, US and Germany were lower. Banking and resources stocks were the biggest beneficiaries although in contrast to what one would usually expect with the tangible “risk on” mentality, the euro was noticeably lower against the dollar.

At a stock specific level, Prudential was one of the biggest gainers of the day following strong results for the 2011 financial year, led by growth in its Asian division. The FTSE 100 once again closed near the highs for the day, putting on 63 points or 1.1% to 5956. The level represents the highest close since July of 2011.

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