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Is the bull run over? That was the question in the City today as London's leading shares struggled to add to nine consecutive days of gains — the longest winning streak since the 11-day rise in late 2003 and early 2004.
The FTSE 100 index gained 432.63 points from opening at 4127.17 on Monday last week and closing at 4559.80 last night.
The 10.5% rise added more than £100 billion to the value of blue-chip stocks.
But the Footsie was down 3.49 points to 4556.31 in subdued trading today.
“Today could be a real battle between the bears and the bulls,” said Ian Horsley, an indices trader at Spreadex. “Some profit-taking is due but the bulls are still in control.” Signs that the worst of the recession is over, and that corporate earnings are on the mend, have fuelled optimism in the City, on Wall Street and beyond and sent global stock markets soaring in recent days.
The Footsie is up 30% since its low in March but only 3% since New Year — a stark reminder of just how far it has to travel before investors even come close to reversing the catastrophic losses they sustained in 2008.
European stocks were also on the slide today, having enjoyed a similarly good run over the past fortnight.
“All good things come to an end,” said City commentator David Buik, at BGC Partners.
“I suspect that the nine-day equity rally enjoyed in the UK, Europe and the US will be closed out today.” Disappointing results from US software giant Microsoft knocked sentiment on this side of the Atlantic, and were a reminder that the recession still rumbles on — raising doubts that a sustained recovery is just around the corner.
Richard Hunter, head of UK equities at stockbroker Hargreaves Lansdown, said: “After what we have been through in the last 18 months the market is every concerned about getting ahead of itself. At the moment, there is a pause for breath.”
Analysts also pointed out that volumes have been thin over the last two weeks, with summer holidays, Ashes cricket and the Open golf dominating thoughts.
“Let's see what happens when the people with brains come back from holiday in September,” said one doubter.
