November has proven to be a good month for the UK stock market, helped enormously by a number of British companies reporting some good earnings.
At the beginning of the month, UK businesses had a large influence over the FTSE due to All Saints Day on November 1st. The holiday is celebrated widely across Europe, meaning that there was little movement from businesses other than those in the UK, and trading volume was low. A number of British companies were coincidentally also performing extremely well at this time. BT and Shell had both made good earnings, but the banking sector was doing particularly well. Despite various issues such as the continued presence of PPI insurance claims, Lloyds TSB announced that their results were on-target. This lead to their share prices rising 8.28% on November1st, as investors’ expectations for the company soared. Barclays rose 5.16% and the Royal Bank of Scotland was up by 4.06%.
The FTSE 100, the index of the hundred best-performing companies in the UK stock exchange, exists to give an at-a-glance impression of how the stock market as a whole is performing. Consequently, it also gives a good indication of the state of the wider British economy. When the FTSE experiences an overall rise, it shows that brokers have confidence in the future success of the companies involved. When these are consumer-driven companies which rely on people having money to spend, then it means a positive outlook for the UK economy as a whole.
As November progressed, there were a few hitches which caused the FTSE to fall occasionally. This is typical of the stock market, and shows how risky investing can be. It particularly highlights the potential hazards of spread betting; if, following the high in the beginning of November, you had placed a spread bet on shares rising and they had then fallen, the financial loss could have been very damaging.
However, towards the end of the month, UK companies have once again caused an increase in share prices on the FTSE. Dixons has proven to be a success in the past week, as analysts predict financial gains following rival Comet going into administration. Due to this, as well as the good performance of other UK businesses, the FTSE 100 saw its best weekly rise in almost twelve months which is great for those in this line of work and makes for more of a lively challenge for those who choose to spread bet.
Author – Adam Barley has been writing articles for a number of years now on various subjects