FTSE driven by corporate news as optimism fades

Analyst recommendations and a bid for a hair care company were the key events driving prices on FTSE 100 this morning after UK investors failed to build on the high-hopes generated by US data on Friday. The FTSE 100 was up 0.2%, a rise of 13 points to 5612.

On Friday the index closed up 0.9% on the first wave of optimism which had continued to spread through to Asian markets this morning. But with no obvious macro economic news, changes in companies or sectors, the index has made no significant moves. Miners were up with Kazakhmys, Lonmin and Xstrata, all subject to price target rises from Goldman Sachs and metal prices had also been boosted by the US data.

Unilever, the household products giant, was the biggest riser on the index. This morning it confirmed a story that it had agreed to buy the US hair care company Alberto Culver Co in a move which will make Unilever the world leader in hair conditioning. Its shares were up 2.7% at £17.93.

Kazakhmys was the second biggest gainer, its shares up 1.7% at £14.45. While BHP Billiton, one of the few companies in the FTSE 100’s top 10 largest companies showing significant gains, was up nearly 1% at £20.25.

The FTSE 100 fallers were technology company Smith’s Group, down 2.2% at £12.00 after a downgrade to ‘neutral’ by analysts at Bank of America ML. And retailer Next, was down 1% at £21.98.

Commentators had different views of what to expect in the week ahead. David Buik at BGC Partners said: ‘This week in the US there are potentially 9 IPOs totalling $3.3 billion – the largest being Liberty Mutual, valued at $1.2 billion. This activity is the best we have seen since December 2007. It augurs well for GM’s aspirations of raising capital in due course. Although investors are likely to be cynical, they will be very patriotic.’

Capital Economics maintains a negative view of the US data and any expectations of UK due out this week: 'This week’s flurry of data releases should give us a further steer on whether the economy has made any progress towards becoming better balanced. While it seems unlikely that the national accounts (Tuesday) will see a revision to Q2 GDP growth in either direction, the balance of payments figures released alongside them look set to reveal a further widening in the current account deficit. September’s CIPS/Markit report on manufacturing (Friday) may well also add to evidence suggesting that the recovery in the export-dependent industrial sector has lost pace.'