Another 111 points or so, and the FTSE 100 would have breached its all time closing high this week. But in the end the gap was too much, not least because of a shock profit warning from Royal Dutch Shell.
On Wednesday, the leading index rose to 6819, helped by the World Bank raising its global growth forecasts and growing acceptance that the US Federal Reserve would tread carefully when deciding the timing of future cutbacks in its $ 75bn a month bond buying programme.
But despite other global markets, notably the Dax and the Dow Jones Industrial Average, hitting new highs, the FTSE 100 fell short in its own attempt at the record 6930 set in December 1999.
It ended the week at 6829.30, up 13.88 points on the day and up 90 points since Monday’s open. Despite not beating the record the index is at its best level since 22 May last year.
The day’s rise came despite some disappointing updates, and was helped by a strong mining sector.
The warning from Shell sent its B shares down 26.5p to 2279.5p, but it recovered from the worst of its falls as investors took time to consider the fact that it looked a bit like a kitchen-sink job from the company’s new chief executive.
William Hill dropped 12.6p to 360.1p despite the bookmaker forecasting full year profits of £334m for 2013, in line with expectations. Investors were worried about the government’s concerns on fixed odds betting machines in bookmakers’ shops, which earn the industry around £1.5bn but have been criticised for possibly fuelling gambling addiction, not to mention allegedly being used for money laundering.
William Hill also admitted that last weekend’s run of wins by the top seven teams in the Premier League had cost it £13m. Nick Batram at Peel Hunt said:
The fourth quarter was a solid update and reflected a continued impressive underlying performance from online sportsbook.
However, poor sports margins already have had a not insignificant impact on 2014 and, with the point of consumption tax on the horizon and the political risk to fixed odds betting terminals, it is difficult to see the shares outperforming.
Rival Ladbrokes, which reported on Thursday, fell 9p to 167p, making the two bookies the biggest fallers in the FTSE 100 and FTSE 250 respectively.
Mining shares provided support for the market, lifted by hopes of continued growth in key market China and following an upbeat note on the sector on Thursday from Citigroup. The latest Chinese GDP data is due over the weekend, which is likely to set the tone for the sector’s next move.
Meanwhile Rio Tinto rose 48.5p to £33.83 following a positive update on Thursday, which prompted JP Morgan Cazenove to raise its target price from £44 to £45.
Glencore Xstrata added 10.95p to 338.15p while BHP Billiton was 30p better at £18.90.
Car insurers accelerated on signs that recent declines in prices could be slowing, with Admiral adding 81p to £14.07, while esure up 16.4p at 284.5p.
Much like the bookies’ dominance of the fallers, this made the two insurers the biggest risers in the FTSE 100 and FTSE 250.
The impetus came from news that car insurance premiums across the UK fell by 1.1% quarter on quarter in the final three months of the year, according to the latest sector survey from Towers Watson and Confused.com. That compares to a 3.9% decline recorded in the previous quarter.
Elsewhere Shire rose 34p to £30.19 despite taking a $ 650m hit by selling its Dermagraft business after less than three years of ownership.
It bought the owner of the business, which specialises in bio-engineered skin substitute, in May 2011 for $ 750m. But now it has disposed of the loss-maker to US group Organogenesis, with no upfront payment but an entitlement to $ 300m in milestone payments if Dermagraft meets certain sales targets.
It was a busy week for retail results, and well as bumper high street sales figures, and there was even room for a bit of bid speculation.
J Sainsbury ended 7.5p better at 368.6p on vague talk it could be a target for a predator – yes, the Qataris were mentioned – and a fairly upbeat comment from Societe Generale. The bank said:
Sainsbury is not immune to a deterioration in market conditions in the UK, but it appears better armed (greater differentiation). On a medium-term view, we see a unique opportunity to mature the assets and return cash to shareholders (£0.7bn in 2016-17 or £1.1bn in 2017-18). We initiate our coverage of Sainsbury with a hold recommendation and a target of 370p.
But the bank put a sell rating on Tesco, down 2.2p at 331.10p, and Morrisons, 0.7p lower at 252.4p.
Meanwhile Morrisons’ online partner Ocado lost 18.5p to 505p after Deutsche Bank began coverage with a sell rating and 440p price target. It said:
Over the past year, the Ocado story has expanded from UK online grocery retailer to international IT services provider. We think the market is placing a high value on the potential licensing income stream while ignoring: 1) the challenge of translating Ocado’s success in UK online grocery to other geographies and other product markets for potential licensees; and 2) the downside risk to the UK grocery profitability from increased price competition.
Finally publishing group Quercus, best known for the Stieg Larsson Millennium thrillers, gave its investors a fright. Its shares dropped 45% to 28.5p after it warned it expected a significant trading loss for the year. It said:
The bulk of our profits are usually generated in the final quarter of the year. However, sales in the final quarter were lower than expected, due in part to continuing issues within the book trade which led retailers to adopt very conservative ordering policies and a lower than expected upturn in digital sales over the Christmas period to the end of the year.
The company is in constructive discussions, which are on-going, with its bankers, Barclays regarding the terms of its facility.
It wants to reduce its reliance on Millennium, but at the same time trumpeted its recent acquisition of the English publishing rights to a new book in the series, due in 2015 and written by David Lagercrantz, the author of I am Zlatan Ibrahimovic.