© Reuters. Resurgent FTSE 100 Kicks Off 2021 With Best Ever Start to a Year
(Bloomberg) — After long being the pariahs of the stock market, U.K. blue chips are turning in their best start to a year on record.
The FTSE 100 Index has risen as much as 5.7% in the first three sessions of 2021, on track to surpass the previous record set in 2009. This time around, the benchmark is getting a boost from investors piling into economically sensitive sectors as U.S. Democrats closed in on control of the Senate, while a Brexit deal has ended a long period of uncertainty for the unloved shares.
Banks, miners and energy shares pushed the FTSE 100 up for a third day on Wednesday on speculation that a Senate win for Joe Biden’s Democrats will fuel more stimulus that will drive economic growth and inflation. That’s adding to bullishness about the market after the U.K. reached a trade deal with the European Union, even as the nation has gone back into lockdown.
“Markets are clearly preparing for a sharp rise in commodity demand thanks to big green infrastructure plans in Europe and the U.S.,” Joshua Mahony, senior market analyst at IG Group Holdings Plc, wrote in a note. “The sharp rise in upside from FTSE banking stocks does highlight the feeling that the more expansive Biden will provide as much support as necessary to avoid major economic suffering, thus lowering the potential losses that come from job losses and defaults.”
The gains come on the heels of the FTSE 100’s worst annual drop since 2008, and signal a shift in sentiment toward the market that’s been the worst performer among major equity markets since the 2016 Brexit referendum. For investors betting on a global recovery from the pandemic, the cheapness of U.K. equities may be attractive as value stocks are forecast by many strategists to shine in the coming year.
The FTSE 100’s stellar beginning to 2021 means the benchmark is on track to surpass the 4.6% gain seen in the first three sessions of 2009 and is heading for the best start to a year since its creation in 1984, when constituents included confectioner Rowntree Mackintosh Plc, acquisitive conglomerate Hanson Trust Plc and oil & gas producer Britoil Plc.
©2021 Bloomberg L.P.Leave a comment