The UK stock market drifted lower before staging a modest rally on Friday. Natural resources stocks were an early bright spot after JP Morgan Cazenove, the broker, raised the target prices at which it thinks Royal Dutch Shell and BP should be trading.
There was strong demand for shares in Croda International, the chemicals company that supplies Boots and L’Oréal, after an upgrade from Berenberg, the broker. Analysts pointed to the company’s track record of innovation, strong returns and scope for future return of cash to shareholders.
Airlines were also flying high, with rises for Easyjet, International Airlines Group and Wizz Air.
Two FTSE stalwarts came under pressure in midweek. Shares in Marks & Spencer were marked lower after Credit Suisse downgraded the stock. The broker pointed to problems in food and clothing, a lack of earnings growth and concerns about its transformation plan. It concluded that M&S “has to keep doing a lot just to stand still”.
Also feeling the heat was WPP, the advertising agency. Barclays argued that most investors saw many structural problems with such agencies and feared clients would put pressure on them to cut prices while demanding the same level of services. WPP shares fell 2 per cent.
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It was a different story for Next, the retailer, whose shares soared 3 per cent after RBC Capital Markets said it had become more competitive, had more sustainable margins and had a faster stock turnaround than M&S and Debenhams. The FTSE 100 index of leading shares closed at 7,665.54.