For a while this week it looked as if February would follow January as a month to forget for the markets.
Continuing concerns about problems in emerging markets, as the US Federal Reserve continued to trim its bond buying programme, sent leading shares lower again at the start of the week.
But with renewed optimism about US growth despite a mixed non-farm payroll report on Friday - the headline figure of 113,000 jobs created was disappointing but the jobless rate fell to a lower than expected 6.6% - investors clearly decided the falls had gone too far. And although the European Central Bank disappointed some observers on Thursday by not cutting interest rates, it eased worries about deflation in the eurozone. Markets also managed to shrug off downbeat Chinese PMI services data.
So the FTSE 100 finished at 6571.68 on Friday, up 13.40 points on the day more than 60 points higher over the week. Michael Hewson, chief market analyst at CMC Markets UK, said:
If investors were confused about the short term direction of equity markets at the beginning of this week, the events of the last two days will probably not have changed that, given the continued uncertainties the health or otherwise of China and emerging market economies, or whether the patchy data coming out of the US is a symptom of the cold weather, or emblematic of a wider economic malaise.
While equity markets in Europe have enjoyed a positive session US bond market prices have also pushed higher, which seems to suggest that an element of caution remains amongst investors, particularly in the context of future growth prospects.
Among the risers, Tate and Lyle climbed 13.5p to 774.5p after JP Morgan moved from underweight to overweight and raised its target price from 735p to 900p. It said:
Tate has a high-quality, health-focused specialty ingredients business, which we believe will drive faster earnings per share growth from 2015, triggering re-rating of the shares.
But Tullow Oil, lifted early in the week by talk of possible bid interest from Statoil, fell 26p to 836.5p after the Norwegian company seemed to pour cold water on the idea with news it planned to slash its capital spending and focus more on returns to shareholders with dividend payments and share buybacks.
Shire slipped 19p to £31.22 after overnight news that Vyvanse, its treatment for hyperactivity, failed in two late-stage trials for adult depression. The drug performed no better than placebos, and Shire said it would no longer continue the development programme for major depressive disorders (MDD). Brian White at Shore Capital said:
While this is clearly disappointing for the company, we had previously highlighted that MDD was a riskier endeavour (than the development of Vyvanse in binge eating disorder).
Technology shares were in focus during the week. Twitter slumped by nearly a quarter after disappointment with its first set of results as a public company. The social networking site reported better than expected revenues but user numbers grew at their slowest rate since the company began disclosing figures. In early trading on Friday it had recovered around 5%. Meanwhile Apple benefited from news it had bought back $14bn worth of shares after recent price declines.
UK Apple supplier Imagination Technologies suffered some profit taking after a surge on Thursday on news of a new deal with the company.
Imagination announced an extended licensing deal to supply its graphics and video technology to Apple, easing fears the US group planned to design its own graphic chips. Imagination jumped 14% on the news, but on Friday lost 11.8p or more than 6% to 173.3p.
