In Like a Lion, Out Like a Lamb: FTSE Steadies

Morning market rally on the FTSE indices subsides by the end of the trading day

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Alanna Petroff | 31-01-12 | E-mail Article

European and UK markets initially jumped on Tuesday, after most countries in the European Union agreed to tighter budget controls, but those market gains were short lived.

EU leaders, who met in Brussels on Monday for their 16th summit in two years, created a treaty that obliges governments to balance their budgets and reduce public debt. The pact will apply to euro-zone countries and any other European Union nations that want to take part. Twenty-five out of 27 EU nations agreed to sign the pact in March 2012. Britain and the Czech Republic were the two countries that refused to sign the dotted line.

This political development, combined with some better-than-expected earnings results, gave investors a boost of confidence early in the trading day, but market gains subsided later in the afternoon.

“Gains were kept on a bit of a leash ... as soon as the US economic data disappointed the market,” says Joshua Raymond, Chief Market Strategist at City Index.

US Consumer Confidence and the Chicago PMI data sets showed unexpected drops, which surprised the market.

By the close of trading, the FTSE 100 Index had added just 11 points, or 0.2%. It finished the day at 5,682. The FTSE 250 Index performed slightly better, shifting up by 75 points, or 0.7%, to close the day at 10.769. The FTSE 350 Index edged up by 8 points, or 0.25%, closing at 3,000.

Amongst the session’s market movers was the microchip design company ARM Holdings (ARM). The company, which designs chips for smartphones and tablets such as the iPhone and iPad, announced quarterly sales and earnings that exceeded general market expectations. Shares in British Sky Broadcasting (BSY) also shot up by 3.7% after the company announced it will soon launch an Internet-television service to gain new customers.

Precious metals group Fresnillo (FRES) was the biggest market loser on Tuesday, losing 2.2% of its value.

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Alanna Petroff is a financial journalist at Morningstar.co.uk. Morningstar welcomes your feedback, as do other Morningstar.co.uk readers. Please share your thoughts in the Comments box below.

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In Like a Lion, Out Like a Lamb: FTSE Steadies

Morning market rally on the FTSE indices subsides by the end of the trading day