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In the waning trading hours yesterday I wrote “I, for one, believe that there may be adequate activity and the right atmosphere to make this the week that the FTSE reaches 7,000.00.” That’s a pretty bold statement to make on a Wednesday afternoon. Lot’s of pundits might dare to say something like that before a new trading week begins, but as for me, I go where angels fear to tread and frame the possibility in a window of only two days.
Well, the FTSE 100 did not make it to 7,000 today, but it came closer than it ever has before. The index opened at 6,945.00 and headed straight for 6,982.79, almost within reach of the sacred number, reminiscent of the hands reaching out ever so close in Michelangelo’s famous painting, The Creation of Adam. Although the index lost some ground as the day went on, it began to rebound after the highly-anticipated March statement from the U.S. Federal Reserve Board. Still, the FTSE closed at 6,962.32, up 17.12 points.
What would it take for the FTSE to hit 7,000 on Friday? If today is a reasonable sampling of what momentum good news (e.g., the new budget) can carry over to the next morning, what would happen if the report from the Fed caused the same basis point increase tomorrow? When the index hit 6,982.79, it was a gain of 37.79 points. Add 37.79 to 6,962.34 and you get 7,000.13. Possible? Yes, most definitely. Probable? More probable right now than ever before.
I noticed that Nav Banwait over at Thames Capital Markets agrees, at least to the extent that “The budget statement and the Fed are keeping things looking pretty bullish and the FTSE should test the 7,000 record point level soon.” Nonetheless, his prediction is much less bold than mine, allowing himself plenty of wiggle room.
Right now I cannot see any directly market-related reason that might limit the potential for hitting 7,000 tomorrow, unless it’s just because it’s a slow news day, which Fridays often are. On the other hand, if U.S. President Obama were to go on TV tonight and tell the world that he is going to stop lying, the FTSE might be able to hit 8,000.
What the Fed Said
In a visionary column published yesterday in The Economist, the online mag observed that “Rarely have economists lavished so much attention on a single word.” That word is “patience,” and it was, as rumored, removed from the Fed’s monthly report, indicating a potential move by the board to raise interest rates. Of course, that has been considered a potential move for more than a year and Janet Yellen made the disclaimer that, “Just because we removed the word ‘patient’ doesn’t mean we’re going to be impatient.”
The Board will consider raising interest rates at its June meeting. If and when they raise them, remains to be seen.
The Thing About 7,000 that Cannot Be Denied
I won’t be the only one waiting with anticipation in hopes of enjoying the historic, record-breaking moment when it happens. You can bet your sweet bippy that the entire world will be watching. Wouldn’t it be cool if 20 March 2015 is the day the FTSE breaks 7,000?
If it doesn’t happen, let me refer you to the last sentence in my article of 18 March: “There are really only a few million variables that stand in the way.” I think I have managed to hedge my bets. Cheerio.
