FTSE rises up to very near six-year highs

The FTSE 100 rose yesterday to return to near six-year highs reached in March, as strong US jobs data lifted markets while mining stocks rebounded on a recovery in metals prices.

Generally, the miners are on a slide, but there is value there

The blue-chip FTSE 100 index ended up 0.9 per cent, or 60.75 points higher, at 6,521.46 points – its best closing level since finishing at 6,529.41 points on March 14.

However, some traders expressed caution over further near-term gains for the FTSE 100, given the market’s inability to break past those previous March peaks yesterday.

“If we can rise and hold above the previous highs, then we would be setting ourselves up for a bullish break,” said MB Capital trading director Marcus Bullus.

“I am a lot more optimistic at the start of May then I was at the start of April, but I would like to see a bit more follow-through to the rally,” he added.

The FTSE’s rise came as global equity markets were buoyed by stronger-than-expected US employment data.

Mining stocks dominated the FTSE leaderboard after a rebound in the price of copper, with ENRC surging up 11.6 per cent.

The FTSE 350 industrial metals sector has fallen more than 30 percent since the start of 2013 as signs of a slowdown in economic growth in China – the world’s top metals consumer – have raised fears of lower demand for commodities.

However, some traders have sought to buy badly-beaten mining stocks – which are among the most volatile in the UK market – when they fall, before then selling them at a profit when they recover on any sign of a rebound in metals prices.

“Generally, the miners are on a slide, but there is value there,” said Hartmann Capital trader Basil Petrides.

Yet several traders expressed caution over whether the FTSE’s rally could gain momentum in the near-term, arguing that some investors might look to book profits on stocks that had risen before adding to fresh equity positions.

“If there are profits to be had, I’d say ‘thank you very much’ and square off the position.

“I’d still be looking to take profits off the table,” said EGR Broking managing director Kyri Kangellaris.