London's FTSE 100 index of leading shares resumes trading next Tuesday after a long holiday weekend, with investors seeking to build on this week's rebound following recent heavy falls.
On Friday, London's FTSE 100 index of leading shares ended the week at 5,791.0 points - rising 2.36 percent or 133.6 points from the previous week.
That was after slumping to a five-month low on Monday and erasing all of its gains won in 2006 on concerns over the prospect of higher US inflation and interest rates.
On April 21, the FTSE had closed at 6,132.7 points - the best finish since February 15, 2001 - as record high oil and metal prices lit up the heavyweight energy and mining sectors. The FTSE was boosted also by strong company earnings and take-over activity.
Investors are concerned that high commodity prices will translate into higher inflation and prompt the US Federal Reserve and other world central banks to raise interest rates, in turn weighing on economic growth.
The FTSE 100 "hasn't been helped by its 28-percent weighting in resource stocks", said Mike Lenhoff, analyst with brokerage Brewin Dolphin.
Oil giants including BP and Royal Dutch Shell, as well as mining groups such as Rio Tinto and Anglo American, are heavily weighted on the FTSE 100 in terms of their market values.
Lenhoff, however, was optimistic heading forwards and stuck to his forecast made in December that the FTSE will be at 6,100 points by the end of 2006. "We expect the FTSE 100 to rebound as a prelude to establishing a wide trading range of several hundred points and it is within that context that our year-end target of 6,100 for the FTSE 100 ought to be viewed."
This week investors will focus on British company results.
The world's biggest mobile phone company Vodafone delivers its full-year earnings on Tuesday following a troubled few months which has seen the group sell its struggling Japanese unit to Softbank Corp for about 15 billion dollars.
Attention will also be on the steel sector, with Anglo-Dutch group Corus unveiling first-quarter results on Wednesday. Strong company earnings should provide a renewed boost to the FTSE, ABN Amro analyst Ian Richards said.
"Recent market weakness should be allowed to obscure the investment case for European equities. Valuations are certainly supportive, earnings momentum positive" and balance sheets strong, he added.
Comments
Comments are closed.