Britain's FTSE scales new 5-1/2 year peaks

by **hlk** Mon 20 May 2013, 17:00

Business & Markets 2013
Written by Reuters
Monday, 20 May 2013 16:50
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LONDON (May 20): Britain's top share index rose to fresh 5-1/2 year
peaks on Monday, spurred on by robust economic data from the United
States and Japan, with technical analysts anticipating further near-term
gains.
The FTSE 100 was up 16.29 points, or 0.2 percent, at 6,739.35 by
0822 GMT, not far from an intraday peak of 6,754.10 reached in 2007,
a resistance level for the index and a near-term target for a number of
technical analysts.
Craig Erlam, analyst at Alpari, reckoned the index could break that level
this week, setting his next target at 6,838, a high in September 2000
which sees as attainable in the next few weeks.
The U.S. Dow and S&P 500 finished at new record peaks on Friday
after estimate-beating economic data and Japan's Nikkei surged to a
5-1/2 year high on Monday as Tokyo raised its assessment of the
country's economy for the first time in two months.
EasyJet was the standout gainer on Monday, ahead 4.6 percent, with
traders citing the impact of a target price hike from Citi - to 1,330 pence
from 1,210 pence - in the wake of recent first-half results from the
low-cost airline.
Peer Ryanair posted forecast-beating full-year earnings on Monday.
While technical momentum indicators such as the relative strength index
(RSI) show the FTSE 100 is in 'overbought' territory - with the 14-day
RSI at its highest since Jan. 2013 - further gains are in sight as investors continue to opt for equities over bonds due to better
returns.
"What's to stop it?" Michael Hewson, analyst at CMC Markets, said, referring to the equity market rally.
"At the end of the day, if you're looking for a return on your money, where do you put it?"
The hunt for investment returns was indicative in good gains for the pharmaceutical sector, which has a dividend yield of 3.1
percent, according to Thomson Reuters data.
Banks also rose as investors took advantage of their valuations, with the sector trading on a one-year forward price/earnings
ratio of 11.25 times, against the FTSE on 12.36 times. - Reuters