LONDON, Apr 4: Britain’s benchmark share index fell for the second consecutive session on Thursday, with some traders expecting little progress in the near-term as investors consolidate gains made from the first-quarter rally.
The blue-chip FTSE 100 index edged lower by 0.3 percent, or 19.96 points, to 6,400.32 points in early morning trade.
The index fell 1.1 percent on Wednesday after weak U.S. economic data reignited concerns over the pace of recovery in the world’s biggest economy. The FTSE 100 nonetheless remains up nearly 10 percent since the start of 2013.
Toby Campbell-Gray, head of trading at Tavira Securities, expects many investors to either sell equities in order to book profits on that rally or to hold onto current positions, with little fresh incentive to add to equity holdings at present.
‘It’s natural in the second quarter for the market to go either sideways or even a little lower. The amount of cash that comes into the market is not as much as it is in Q1,’ he said.
Campbell-Gray backed buying into the blue-chip pharmaceuticals and chemicals sectors – sectors seen as traditionally ‘defensive’ due to their companies’ tendency to generate steady profits and solid dividend payouts.
Despite the weak economic outlook in Britain and elsewhere, equity markets have been supported by injections of liquidity by world central banks, which have hit returns on bonds and cash meaning many have turned to stocks for their better yields.
The FTSE 100 has fallen back from 5-year highs of 6,533.99 points reached in early March, but most investors expect the market to rise gradually over the course of 2013, even if it makes little progress in the second quarter.
A poll last month showed that analysts and fund managers expected the FTSE 100 to rise to 6,750 points by the end of 2013.
Technical trading analysis firm FuturesTechs said it would keep a bullish view on the FTSE 100 provided it did not fall below the 6,319 points level, and would back buying shares for relatively cheap prices on days when the market fell.
‘Dips look good to buy,’ it wrote in a research note. (AGENCIES)
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