Stock market round-up

The weekly investment report from John Dance, chief investment officer and CEO of Vertus Asset Management.

Fundamental data edged back into the spotlight last week as the UK recorded the gross domestic product (GDP) for the final quarter of -0.3% (below the consensus of -0.1%), on a quarter on quarter basis.

This followed disappointing news that the UK Public Sector Net Cash Requirement was higher than expected with Government spending rising and income slowing, displaying how the debt situation in the UK is making no progress.

Despite this seemingly gloomy backdrop the FTSE 100 index rose to four and a half year intraday highs and finished the week up 2.1% at 6284.5 points and now stands at its highest level since early 2008.

The widely quoted index was lifted by speculation that Vodafone (a large component of the index, rising 6% over the week) could be positioning to sell a proportion of its stake in Verizon Wireless (the at times troublesome joint venture with US listed Verizon).

The S&P 500 broke through the 1500 level, on an intraday basis, not seen since late 2007 to finish the week up 1%.

The NASDAQ lagged the S&P500 as Apple (making up roughly 10% and 3% of the respective indices) dropped almost 12% on Thursday as it reported disappointing iPhone sales over Christmas and fear spread that it is no longer leading the market as it once did as it also guided future revenue expectations downwards.

David Cameron traded the snowy hills of the UK for those of Davos as he attended the World Economic Forum shortly after delivering a delayed speech on Britain’s membership of the EU.

The speech appeared to receive a mixed review from European leaders and it will no doubt be some time until we see what terms Europe will be willing to negotiate on.

Spain was able to issue a 10 year syndicated bond at a yield of 5.4%, taking advantage of the relative complacency of the markets and the apparent confidence in politicians and policy makers ability to steer the Eurozone away from crisis, even as the poor Markit Flash French Manufacturing PMI (42.9) displayed how core nations are struggling in line with peripheral nations.

Portugal was able to tap one of its existing 2017 bonds and is now crucially eligible for application to the OMT programme, which could end up being used as a rehabilitation programme rather than Mario Draghi’s intention that it be used to stabilise the short term bond yields of nations feeling the full force of the market.

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