FTSE Could Reach 6,300: Analyst
The FTSE 100 could rally another 300 points after topping 6,000 on Wednesday forthe first time since July 2011, according to Sandy Jadeja, chief technical analyst at U.K. brokerage City Index.
In common with markets across Europe and the globe, the U.K.'s blue chip index gained sharply on the first trading day of 2013 after the last-minute signing of the U.S. "fiscal cliff" deal, designed to avert an avalanche of tax rises and spending cuts due to hit America.
The FTSE closed 2.2 percent higher on Wednesday at 6,027.37, breaking above the psychologically important 6,000 resistance level.
Jadeja forecast the FTSE would continue to rally throughout January and into February.
"I am expecting to see another 300 points coming into the FTSE chart before we start seeing some topping out action," Jadeja told CNBC Europe's "Closing Bell"on Wednesday.
In his City Index blog, he added: "Over the next few weeks the FTSE 100 will need to hold 5,900, but if a pullback occurs we may see 5,835 being tested. As long as we do not see a change in momentum, this should not be a major concern.
"From a pattern perspective, we see the classic higher highs and higher lows supporting a bullish case for January-February."
However,other market participants were unconvinced that breaching 6,000 heralds a sustained rally for the FTSE.
"It is going to be difficult to call the uptrend until we see a break above the big technical barrier around 6,100, last tested in February 2011," said Mike McCudden, head of derivatives at Interactive Investor, in a note regarding the FTSE.
"A breach of 6,100 could see a significant move higher, but with much left to be resolved not only in the U.S. but also in the euro zone, it is looking highly unlikely at this juncture."
Joe Rundle, head of trading at U.K. trading platform ETX Capital, was also skeptical about the rally.
"I am not sure it is sustainable, and I expect to see a little of selling in the next couple of days," Rundle told CNBC.
However,Rundle added that the index could be boosted later in 2013 by a rise in commodity stocks due to a recovery in global growth.
"The FTSE is so dominated by commodity stocks, that if they start performing slightly better, the FTSE will have a big rise," he said.
Rundle added that global growth could be generated in the second quarter or second half of 2013 by a revival in the U.S. housing sector.
"That will push the world economy into some signs of growth, and that is generally good for commodities, and should push the whole sector higher," he said.
In the meantime, Rundle said he was more bullish on the FTSE than the German Dax,which also ended Wednesday's trading session 2.1 percent higher.
"I think there will be some resolution to the euro zone crisis, but it will result in Germany having to bailout and put its hand in the pocket for the rest of the zone. That is going to hit the Dax heavily I think," he said.
Tom Elliott, global strategist at JP Morgan Asset Management agreed, and added:"Until we get really robust signs of cyclical upturns in growth, I see the FTSEas a relatively decent place."