Footsie struggling to break 6,100 barrier

By Graeme Dickson
Updated: 13:03 EDT, 9 February 2011

The FTSE 100 rose 91 points between last Wednesday and yesterday's close to finish at 6091, shrugging off a spate of negative economic news last week.

On Thursday, Spanish banking stocks put pressure on its UK listed counterparts following very poor fourth quarter results from banking behemoth Santander.

Friday was surprising good fare. The FTSE managed to rise despite the Non-Farm payroll figures in the US coming in at just 36,000 additional jobs created against an expectation of 140,000.

The chances of a near-term rise in interest rates in the US could be lowered as a result of the disappointing outcome. That would help markets prosper as companies continue to pay lower financing costs.

German factory orders came in at -3.4 per cent against an expected decline of 1.5 per cent on Monday.

Yesterday, the Chinese authorities increased their one year lending rate by 0.25 per cent to three per cent.

The FTSE is still struggling to push past 6100 and given the recent economic data I would be inclined to think that until new positive economic news comes out, we might see a temporary lid on the index until then.

Big mover: How you can profit

Best performing stock of the last week in the FTSE 350 came from international logistics group Stobart Group (STOB), up 11.67 per cent to 163.6p over the last week.

The company recently announced that Southend Airport, which Stobart operates, will start a new daily passenger service from the Essex base to Waterford and Galway in Ireland.

The shares initially had a muted reaction to the news. But on Friday, they started to pick up with no obvious catalyst as trigger.

Judging by the increase of shares on loan from 4.3 per cent in October to 5.4 per cent last month, there may have been a short-squeeze as traders exited their bear positions.

The stock looks to have initial resistance at 165p with 180-185p being a major resistance level, given that the all-time high was 183p back in February 2007. Given that the stock trades on a price to earnings ratio of 17.8, falling to 15 in 2012 if the results come in line with expectation, the share price seems to be up with events, barring a takeover.

Dominos pizza: It launched a new iPhone application in September

Keep an eye on...

Keep an eye on Domino's Pizza (DOM) next week, which is scheduled to release its preliminary results on Tuesday 15 February.

The company announced on 5 January that its full year results will exceed market expectations, benefitting from a roll-out of 57 new stores. Meanwhile, sales from e-commerce rose from £78 million to £128 million over the last year.

It also launched a new iPhone application in September (which I have used and have found to be pretty impressive) that has brought in an additional £1 million in revenues.

The £862 million company has £16.7 million in net debt, which is relatively small. But its price to earnings ratio projected for 2012 is very pricey at 25 times earnings. Domino's will need to maintain its sales momentum in order to prop up the share price, but for now I would not be in too much of a rush to chase the stock.

Highlights for the FTSE 350 over the last week include:

Pace (PIC), the set-top box manufacturer fell 5.8 per cent to 201p last Thursday after confirming press speculation that it is in talks with an Indian satellite operator, albeit it was up 10.4 per cent the previous day on the rumour.

On Friday SuperGroup (SPG), the owner of the SuperDry brand, rose 11.76 per cent to 1710p after it bought out its franchisee's operations in France and Benelux: this is SuperGroup's leading franchisee globally.

Cable & Wireless (CW.) rose 4.6 per cent to 76.35p on Friday on talk that AT&T will bid for the company.

Bodycote (BOY), the thermal processing company, rallied 6.88 per cent to 307.5p on Monday although there was no obvious reason for the rise.

Also on Monday, Centrica (CNA), the owner of British Gas fell 0.7 per cent to 328p despite rumours that Russia's Gazprom was looking to make a move for the utility group.

Yesterday Premier Oil (PMO) fell 6.8 per cent to 1994p after its oil estimates for the Catcher North Well in the North Sea came in below expectations.

On the rumour front Smiths Group (SMIN) pushed 2.1 per cent higher to 1403p on talk that Honeywell was eyeing the industrial company up.