FTSE 100 week: Banks update the nation
It was a bumper week for bank results where the Footsie climbed to its highest level since October.
Footsie action: We round up the week's trading
On Monday, after Barclays and HSBC hit the right notes with the City, the FTSE 100 index of the UK's top companies rose 1%, to close at 4,682.5, bringing it to levels not seen since last year.
And the market managed to maintain its consistency after news from the Bank of England that it would pump an extra £50bn into the economy through its quantitative easing (QE) scheme. Overall during the past trading week, the index rose even more, by 3%, to close higher on Friday, at 4,731.56.
Shares in Barclays soared 21% to 365p - the week's biggest rise on the Footsie, after it unveiled pre-tax profits for the first half of the year of £2.98bn, while HSBC, up 10% to 667p, coincidentally also announced profits of £2.98bn for the same period.
Lloyds Banking Group also surged to the top of the leader board, rising 20% to 102p, following the news that the new owner of HBOS revealed a smaller-than-expected half-year loss of £4bn.
Asian-focused bank, Standard Chartered, for its part fell 3% to 1,374p, after it announced a surprise £1bn equity fundraising as it posted a better-than-expected 10% increase in its first-half profits.
However, on Friday, shares in Royal Bank of Scotland slumped 12%, to lead the FTSE 100 losers' board on the day, after the 70% state-owned lender revealed it was hit by £7.5bn of bad debts. It achieved a slender £15m profit in the first half of the year and over the week it managed to firm 5% to 46.99p.
Chief executive Stephen Hester warned that he did not expect the bank to recover until 2011.
David Buik, of brokers, BGC Partners, says: 'It's been all about the banks this week and results were generally in line with expectations, with Barclays and HSBC slightly better than anticipated. Going forward, we can now see a decoupling between the economy and the market and equities look good but we probably need a slight correction however, I can see the market rallying further from here towards the 5,000 mark by year end.'
Following its disastrous results last week British Airways, had a turn of fortune this week, after jumping 20%, to close at 171p.
The miners were partly responsible for holding back progress during the week, with Antofagasta down 3% to 732.5p, Eurasian Natural Resources 2% looser at 848.5p and Rio Tinto was off 3% at 2421.5p.
Another of the week's fallers was Standard Life, after dropping 3% to 192.8p. The life insurer posted its half-year results on Wednesday, and left analysts underwhelmed after it reported a 15% drop in new business sales and said its capital buffer had been eroded from £3.3bn to £3.1bn during the first half of the year.
Competitor Aviva, despite a dividend cut, enjoyed a better week, climbing 9% to 381.8p, following its announcement of better-than-expected operating profits. Legal & General put 2% to 65.6p despite axeding its shareholder dividend by 45%.
Unilever shares enjoyed a gain of 2% to 1,618p, after traders were encouraged by a return to sales volume growth during the second quarter.
In the FSTE 250, Intermediate Capital Group led the index higher, up 32% to 258.7p, after Bank of America Merrill Lynch lifted its rating to buy. Also on the rise was Carpetright, up 30% to 830p, after it surprised investors with a 1.4% rise in UK like-for-like sales for the 13 weeks to August 1.
Earnings at broadcaster ITV collapsed by 61% in the first half of 2009 following a 15% fall in television advertising, the steepest drop on record. It said the decline in advertising revenues should slow over the rest of this year and announced the sale of Friends Reunited for £25m. Over the week it rallied 7% to 43p.
Housebuilders enjoyed a week of gains after the Halifax said prices rose by 1.1% in July and Taylor Wimpey said trading conditions had improved significantly in the first half of the year. Bellway rose 6% to 782p and Barratt Developments added 12% to 222p but Taylor Wimpey failed to benefit and fell 3% to 38p.
One of the biggest risers overall during the week, with a 142% jump to 29p, was small-cap Gulf Keystone Petroleum. The oil and gas explorer announced a significant oil discovery in northern Iraq.
Brent crude soared 12% over the week to almost $75 a barrel, but refiner Royal Dutch Shell didn't feel the rise, after sliding 1% at 1,564p while BP put on 3% to 509.75p. Tullow Oil found itself flat over the week at 993p, while BG Group firmed 1% to 1,009p.
THE WEEK AHEAD
On Tuesday, Friends Provident, Intercontinental Hotels and International Power post interim results and are followed by preliminary results from BHP Billiton and interims for Balfour Beatty on Wednesday. Interims arive from life insurer Prudential on Thursday, when Thomas Cook also publishes a trading statement.
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