The FTSE Finish Line – July 12 – 2023

FTSE & Sterling Soar As A Weak USD Supports Miners And Banks Pass Stress Tests

The FTSE is firmly in the green heading into the close of trade on Wednesday. The positive momentum was driven by higher metal prices, which lifted mining stocks. Additionally, British banks saw gains after successfully clearing the Bank of England’s stress test. By the end of trading, the blue-chip FTSE 100 had increased by 1.79%. Industrial metal miners particularly benefited from a 0.8% gain as prices of most base metals rose, supported by a weaker US dollar, Antofagasta +4.7% sits in second to top spot with Glencore following suit gaining 4.5% . This price movement contributed to the overall positive sentiment in the market. The miners were pipped to the top spot by Smurfit Kappa up 5% as investors cheered the opening of their first North African plant and the announcement that the largest paper and packaging firm intends to expand their North African presence.

The Bank of England’s annual stress test results were released this morning, indicating that the eight major lenders assessed would be capable of withstanding a stressed environment with rising interest rates. The test further revealed that none of the banks would need to submit revised capital plans, reinforcing their financial strength and ability to handle adverse scenarios. These developments in the mining sector and the successful stress test results for British banks played a significant role in the positive performance of the FTSE 100, Natwest 3.5% and Barclays 3.4%, .

On the negative side of the ledger IAG sits at the bottom of the index shedding 2.5% on the session after being downgraded by Deutsche Bank, the German investment bank moved its rating to hold from buy as it cut price targets across the European airlines sector. Analyst Jamie Rowbotham said: “We have seen some weakness in our fares data, with 60-day out prices for travel in August having screened ~2% down year over year on average, and walk-up fares in June ~6% down.” He said while the idea of a slowdown did not resonate with the airlines in recent pre-close conversations, “we are nonetheless exercising some caution.” For 2023, the bank has trimmed forecasts for the September quarter more than offset by upgrades to the June quarter and thinks assumptions for the December quarter are sufficiently prudent. For 2024, however, Deutsche predicts fares will fall 6% year-on-year versus flat before. This has “resulted in a material cut to our profit forecasts which now sit ~20% below consensus on average.” Deutsche has lowered its share price target for IAG to 165p from 200p

FTSE Intraday Bullish Above Bearish below 7400

  • Above 7550 opens 7660

  • Primary resistance  is 7600

  • Primary objective 7193

  • 20 Day VWAP bearish, 5 Day VWAP bullish