MARKET REPORT: Flying Footsie heads back towards 7000

THE FTSE 100 came within a hair’s breadth of closing above 7000 as the London market enjoyed another day of gains.

The index brushed off immediate fears that Tuesday’s rally – after bruising slides on Monday – was a one-off. It rose 1.7 per cent, or 117.15 points, to finish at 6998.28.

Many market observers were worried that Tuesday’s recovery was what’s known in the City as a ‘dead cat bounce’ – a phrase which uses the logic that even a dead cat will bounce if it falls from a high enough height.

Rebound: The FTSE 100 brushed off immediate fears that Tuesday’s rally – after bruising slides on Monday – was a one-off. It rose 1.7 per cent, or 117.15 points, to finish at 6998.28

But travel, retail and other leisure stocks rebounded for the second consecutive session, as a series of upbeat company results also boosted shares.

Michael Hewson, chief market analyst at CMC Markets, said: ‘Less than two days after Monday’s sharp falls, markets have undergone a complete and utter mood change.

‘The concern that rising Delta infections will slow down the economic rebound, appears to have been replaced by optimism that today’s better than expected company reports speak to a consumer that is down but by no means out.’

Stock Watch – Foxtons 

Foxtons  is considering whether to sell its mortgage broking arm, Alexander Hall.

The division has been part of the London estate agency chain since the 1990s and accounted for around 9 per cent of its £94million revenue last year.

Alexander Hall has around 80 staff.

Foxtons said it was reviewing ‘strategic options’ for the business and this could include selling it.

Shares in the small-cap company, which has struggled during the coronavirus pandemic despite house prices reaching record levels, rose 8.2 per cent, or 3.85p, to 50.6p yesterday.  

One example was a bullish update from Next (up 7.5 per cent, or 552p, to 7946p), which nudged fellow retailers Marks & Spencer (up 5.4 per cent, or 7.05p, to 138.6p) and Asos (up 4.4 per cent, or 163p, to 3907p) higher. 

But Next was beaten to the top spot on the Footsie leaderboard by Rolls-Royce, which tends to excel whenever airline shares are higher because it makes a sizeable amount of its income from flying hours.

The engine maker jumped 7.8 per cent, or 6.98p, to 97p, and was trailed by other travel-related stocks such as Premier Inn-owner Whitbread (up 6.1 per cent, or 173p, to 3012p) and British Airways-parent IAG (up 5.6 per cent, or 8.96p, to 169.42p).

The FTSE 250 closed up 1.9 per cent, or 422.49 points, at 22,541.97, as traders became more enthusiastic about post-Covid prospects.

WH Smith (up 6.6 per cent, or 100p, to 1614.5p), Carnival (up 9.4 per cent, or 9.36p to 1465.4p) and SSP (up 7.2 per cent, or 16.2p, to 240.6p) all gained, while Easyjet finished up 4.3 per cent, or 33.6p, at 810.8p after broker Liberum increased the rating on its shares from ‘hold’ to ‘buy’.

It was Cineworld, however, which knocked it out of the park, rising 14.9 per cent, or 8.68p, to 67.06p after chief rival Odeon said it welcomed 1m customers to its cinemas across Europe last week, signalling that people are still keen to go and see films on the big screen.

Elsewhere on the FTSE 250, reports surfaced that American private equity group Clayton Dubilier & Rice is working on another bid for Morrisons after a £5.5billion offer was rejected last month.

The supermarket group has instead accepted a £6.3billion bid tabled by investment group Fortress. Its offer equates to 254p – but Morrisons’ closing price of 265.1p last night (up 1.5 per cent, or 4p) indicates that the City is getting ready for a bidding war.

Miners including Antofagasta were higher after copper prices stabilised – even though the group (up 4.3 per cent, or 58p, to 1422p) saw output drop by 3 per cent in the first six months of the year.

Footsie peer Rio Tinto announced that after 32 years it will fund a study assessing the environmental damage of its copper and gold Panguna mine in Papua New Guinea. It has not decided whether to fund the mine clean-up. 

Rio (up 2.3 per cent, or 135p, to 5971p) is trying to rehabilitate its reputation after it blew up two 46,000-year-old caves in Australia.

The Anglo-Australian group added that it has shut one of four furnaces at its Richards Bay Minerals operation in South Africa, due to a drop in the amount of materials delivered to burn.

It blamed this on the escalating security situation in South Africa, which has seen tensions ignite after former president Jacob Zuma was arrested.