The FTSE100 has broken through the 5000 barrier for the first time in more than two-and-a-half years. Mike Collins shares the jubilation
London’s FTSE100 share index has broken the 5000 barrier for the first time since June 2002 amidst strong trading on the market.
City analyst Colin Perry said: “We are in for a sustained bull market for at least a couple of years. I really think we’ve turned the corner now and, barring non-economic shocks such as natural disasters or major terrorist strikes, the index should hit 6000 before the end of 2006.”
Two of the main factors propelling the recovery are the revival of takeover activity and a run of excellent results from blue chip companies like Shell. “That’s true, but don’t forget we’ve also benefited from a robust domestic economy and a buoyant Wall Street,” commented Perry. “What happens over on the other side of the Pond has a big bearing on market sentiment here.”
Looking ahead to the remainder of 2005, Richard Hunter, head of UK equities at Hargreaves Lansdown, said: “There are three sectors in particular worth keeping your eye on. IT hardware, which suffered badly in 2004, looks good for a recovery.
“Telecoms is currently awash with cash as Broadband and 3G finally deliver the goods. BT looks especially strong here.
“Finally, given the uncertainties for the year ahead, the ultra-defensive tobacco sector looks pretty solid to me.” Paul Feeney, head of European retail and bancassurance at Gartmore, commented: “Preferred sectors include IT hardware, telecoms, transport, media, basic materials and selected financials. We see little value in defensive such as utilities.”