FTSE 100 Index Boosted

Posted on | June 24, 2009 |

The FTSE was given a boost this afternoon following a slow morning after positive figures coming out of Wall Street.

The Dow Jones is up 95.53 points (1.15%) to 8418.44 and the Nasdaq is up 37.11 points (2.10%) to 1802.03. By 4pm, the FTSE 100 was boosted significantly by these results, garnering 50.62 points (1.20%) at 4280.64.

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The US was buoyed by good news from the durable goods order figures. New orders rose 1.8% in May, according to the Commerce Department, even though experts predicated a 0.9% drop. This is the third consecutive month of growth for this sector.

The Organization of Economic Cooperation and Development also released positive news for the US, stating directly that the economic outlook has improved for the first time in two years. The world economy, as a whole, will rise 0.7% next year.

Bad news, however, for the UK economy, as the same announcement showed the UK stood apart from the rest of the 30 advanced economy members; the report showed the country to be in a ‘sharp recession,’ and suggested that output would shrink by 4.3% this year, with no growth next year. However, this information contradicts several independent economic announcements, which place this year’s shrinkage at about 3.7%.

US’s Monsanto released better-than-expected figures today; net income was $694 million, or $1.25 per share, up from the expected $1.18 per share. The company also announced restructuring efforts. The share rose 3.2% to $81.85 in pre-market trading. Oracle, the software maker, also released positive results, giving them a 7.5% rally before the market opened.

The dollar, however, fell to a two-week low, plummeting against a variety of currencies after poor existing-home-sales data was released. This appears to have led to a surge in copper prices; the metal was trading up 6.7 cents, more than 3% to $2.1940 per pound. MF Global Analyst Edward Meir cautions that the long-term success of copper depends greatly on Chinese investment, and, while the outlook is positive, China’s economy is by no means untouchable.

US Investors await the Federal Reserve announcement this evening, which has led to a small boost in the banking sector. The expectation is that the central bank will maintain a near-zero interest rate. Analysts at Barclay’s Capital stated, ‘The Fed may adopt even stronger language to signal that it is likely to keep rates on hold in coming months, in order to combat rising market expectations of near-term tightening’ [1].

In the UK tomorrow, look out for results from Currys and PC World owner DSG International; the news is not expected to be positive, especially since its rival, Kesa Electricals, revealed a 50% cut in profit today. JP Morgan and software specialist Micro Focus are also releasing results tomorrow.

[1] Reuters, June 24 2009

By Anthony Grech, Research Analyst, IG Index.

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