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FTSE Rally Continues on Friday

Despite some setbacks, the FTSE 100 is locking in a decent gain for the week

Alanna Petroff 3 August, 2012 | 2:05PM

Despite some market setbacks throughout the week, particularly on Thursday, the benchmark FTSE 100 index locked in a decent gain in the first week of August.

The strong overall rally on Friday was pushed ahead by financial services and mining companies. In particular, the financial services firm Prudential (PRU) and the copper producer Kazakhmys (KAZ) were standout performers.

“The FTSE, for all of the bad news over the last few months (and there has been a lot), remains solidly within the top half of the trading range of the year to date and is still up from the 2011 closing price,” points out Simon Denham, CEO at Capital Spreads.

The general banking sector also got a boost on Friday after the partially-nationalised Royal Bank of Scotland (RBS) reported first-half earnings results that met general market expectations. The bank reported a pre-tax loss of £1.5 billion, but investors had been prepared for a loss and reacted by bidding shares higher.

A variety of other London-traded banks reported earnings over the last week. To learn about Morningstar’s assessment of the different banks, read “Bank Earnings Update.”

Across the pond, the US jobs data for July surprised to the upside, showing the American economy created 163,000 non-farm jobs last month. This data from the US Labor Department exceeded economists’ expectations. However, it’s important to note that despite the rise in non-farm payrolls, the overall American jobless rate ticked up to 8.3% from 8.2%.

Looking ahead to next week, there are a variety of economic announcements that could move the market. The Bank of England’s Inflation Report, which gives a forecast for UK growth and inflation, will be particularly important for understanding current and expected macroeconomic trends in Britain. Plus, “the coming week witnesses another round of monetary policy announcements with the RBA (Tuesday) and BoJ (Thursday) due; both are expected to remain on hold,” explains an economic report from Investec Securities.

Market Performance (July 30 - August 3):
FTSE 100 Index: +2.84%
FTSE 250 Index: +1.09%
FTSE UK All Share Index: +2.59%
FTSE Small-Cap Index: +1.57%
FTSE AIM 100 Index: +1.49%
FTSE Fledgling: +0.80%

See the daily market commentary articles from earlier in the week:
Monday: FTSE 100 Jumps 3.5% in 3 Days 
Tuesday: FTSE Rally Halted as Earnings, Central Banks Weigh
Wednesday: FTSE Defies Gloom and Rallies Ahead
Thursday: ECB's Draghi Disappoints and FTSE Flops

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.