FTSE 100 continues to rally

One year after the UK stockmarket hit its recent bottom, the FTSE 100 index has risen by more than 60% from its lows of March 2009. This strong recovery triggered renewed speculation that the benchmark index might be within credible distance of the psychologically important 6,000-point level. During the course of March, the Footsie reached its highest level since June 2008.

HSBC reported full-year profits that were hit by higher costs resulting from bad loans. The subject of pay and bonuses within the financial sector remains both sensitive and highly controversial – nevertheless, HSBC put aside 25% of the revenue generated by its investment-banking arm to pay employees within the division.

For its part, Royal Bank of Scotland reported its pension deficit rose to £2.91bn last year. The bank admitted this deficit might continue to increase and also warned that this might “have a negative impact on the group’s capital position … or result in a loss of value in its securities”.

Lloyds Banking Group announced its management expects the company to return to profit this year, as the impact from bad loans appears to be less severe than previously thought. Meanwhile, insurers Legal & General announced a return to profit for 2009, despite experiencing lower sales in “difficult” markets, and raised its dividend payout by 33%.

Department-store operator Debenhams announced a rise in first-half sales and profits during the month. Earnings were boosted by the company’s decision to increase the amount of selling space for its own-brand ranges. Elsewhere bicycle and car equipment retailer Halfords expects full-year earnings to beat consensus forecasts, driven by effective cost control. However, floor-covering retailer Carpetright warned profits are likely to be below consensus expectations.

In the energy sector, full-year 2009 profits rose at oil exploration & extraction company Cairn Energy to $53m (£34.45m), compared with $11m in 2008. Elsewhere, Weir Group, which manufactures pumps for the mining sector, announced better-than-expected profits. The company expects demand for its products to rise this year and increased its dividend by 14%.
Internet gaming company 888 Holdings announced a decline in full-year profits, highlighting the difficult economic environment and the effects of foreign exchange as reasons for the drop. Towards the end of the month, rail support services company Jarvis announced it was being put into administration, citing difficult trading conditions and a substantial drop in the volume of rail and plant work.

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