FTSE on course for strong weekly rise
|The FTSE 100 has enjoyed a strong rise this week, with the index breaking out of its recent narrow trading range to move back above the 7500 level. The gains are due in part to the pound which is lower across the board with the announcement of a slower than expected increase in inflation on Tuesday attracting sellers back into the market.
FTSE finds the right mix
Rising global risk sentiment has been one of the chief causes of the advance in recent sessions, with recent stronger than expected Chinese data seeing the benchmark get off to a strong start. In addition, stocks on the other side of the Atlantic have been in a bullish mood with major US indices posting record peaks as they add to already impressive year-to-date gains. The last but by no means least contributing factor supporting UK stocks has been the pullback seen in the pound, with fears of the rise in inflation eased somewhat by the decline in the Consumer Price Index (CPI) for June.
GBP falls further against the Euro
The US dollar, which is the most widely traded cross against the pound, fell back through the 1.30 handle yesterday but there has been a recovery of sorts so far this morning with the market retesting this psychological level in recent trade. The biggest gainer against sterling on the week is the Euro, but it should be pointed out that this is in no small part down to the single currency soaring yesterday after thinly veiled attempts to appear dovish by ECB president Draghi failed to halt the currency's recent appreciation. The EURGBP is set for its highest weekly close since late October and, in a similar pattern to the FTSE, the market has apparently broken out of a narrow recent range to the upside.
Investors rush to buy Sports Direct stock
The share price of Sports Direct has come within a whisker of a 12 month high this morning as investors have piled into the stock despite the retailer yesterday reporting a 60% drop in profits. It's been a torrid few years for shareholders as they've seen the price of their holdings decimated following a string of bad publicity, revolving mainly around owner and founder, Mike Ashley. Just over three years ago the stock was above £9 but the spate of scandals has seen the majority of the firm's valuation wiped off with the past year the price languishing below the £3 level. However there is now a growing feeling that the worst could be behind them, and even though profits fell sharply in the last 12 months, this was due in part to a poor decision to hedge the company's FX exposure at a rate that proved to be far above the ensuing market. Today's gains have built on Thursday's rise which, taken together, now amount to approximately a 16% increase since the earnings release.
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