Savvy investors take advantage of FTSE rally

As the FTSE 100 index posted its best monthly performance in six years in July, Barclays Stockbrokers clients are continuing to buy into market strength, suggesting that they believe there is more positive performance to come - average buy:sell ratios for the month were 53:47. Further evidence of this continued optimism is provided by research from Barclays Stockbrokers, which reveals a large majority, nearly two thirds (60%), of investors expressing confidence that the upturn in market conditions is set to continue.

Caution does, however, remain with in one in five investors (20%) saying they do not expect a market recovery in the very near future. A further fifth (19%) of investors remain undecided on the immediate prospects for the FTSE.

Barbara-Ann King, Head of Investments at Barclays Stockbrokers says: "Although the FTSE 100 still falls far short of levels seen this time last year, it is encouraging that there has been a sustained rally over recent months. While trading volumes dropped during May and June, they have bounced back strongly during July and we are certainly not yet seeing any signs of a summer slowdown.

"It is also encouraging to see that investors are confident in this market rally - however, sentiment still remains divided as to whether this is set to last. The market volatility of the past year means that many investors still remain cautious when it comes to getting back into the market."

Henk Potts, Equity Strategist at Barclays Stockbrokers says: "As equity markets have moved from the bottom to the top of the recent trading range in a very short space of time, markets are likely to need a ‘pause for breath'. Whilst not expensive, valuations have rapidly been approaching fair value; which could potentially cap upside momentum in the short term. Although a much better than expected start to the second quarter earning season should lead to some upgrades in due course; thus giving scope for further gains in the second half of the year."