FTSE 100 hits nine-month high amid Brexit deal relief and vaccine hopes – as it happened

Graeme Wearden

from on 2020-12-29 18:53 (#5C647)

Rolling coverage of the latest economic and financial news

Latest: FTSE 100 hits nine-month high
AstraZeneca rallies on hopes of Covid-19 vaccine approval
UBS: UK shares to rally in 2021
Japan's Nikkei at 30-year peak
Wall Street hit record after Trump signs stimulus bill

6.53pm GMT

And finally, here's our report on today's stock market rally in London.

6.52pm GMT

Back in New York, shares have dipped into the red after Senate Majority Leader Mitch McConnell blocked an attempt to increase the direct payments in the US coronavirus relief bill to $2,000, from $600.

McConnell rejected a Senate Democrat request to pass a bill boosting the stimulus checks by unanimous consent', despite vocal demands from Donald Trump.

There it is. McConnell blocks motion to vote on Democrats' $2,000 relief checks bill. pic.twitter.com/iYceWbNxiU

The Kentucky Republican faces pressure to act after the House - with nearly all Democrats and a few dozen Republicans on board - voted Monday to boost the cash deposits to $2,000 from $600. Now, Senate Republicans wary of spending more on pandemic aid have to decide how to handle a vote on a bill backed by President Donald Trump and Democrats as they try to hold on to their majority.

McConnell brought the chamber back this week with one major goal: overriding Trump's veto of the annual National Defense Authorization Act. He has not yet committed to bringing the $2,000 payment bill up for a vote, and it is unclear now how one would take shape.

Senate Republicans face pressure to vote on $2,000 stimulus checks after House passes bill https://t.co/tPqDUwE8u1

6.19pm GMT

There's no Brexit cheer in the UK performing arts sector, though.

Actors, musicians and comedians are alarmed that provisions in the Brexit trade deal will prevent British performers moving around many European countries without a work permit. Here's the story:

5.24pm GMT

Reuters' reports that Brexit trade deal cheer' lifted shares in the City today:

Britain's blue-chip FTSE 100 index ended at its highest since March on Tuesday as investors returned from a long weekend to cheer a post-Brexit trade deal that averted a chaotic exit from the European Union.

The deal should see sentiment towards the FTSE indices recover just as the dividend payout ratio improves, vaccines are rolled out and overseas revenues accelerate. We lift UK equities to Bullish," analysts at brokerage Jefferies wrote in a note.

5.20pm GMT

The domestically-focused FTSE 250 index of medium-sized companies also rallied today, ending 1.7% higher at 20,897 points, a new 10-month high.

European stock markets closed at their highest level since February too, with the rally in London helping to lift the Stoxx 600 by 0.75%.

5.13pm GMT

After a strong day's trading, Britain's stock market has finished at its highest closing level in almost 10 months.

The FTSE 100 index has closed up 1.55% today at 6602 points, its highest closing point since 5th March (midway through the market crash in the first wave of the pandemic).

A double-dip recession, thanks to new viral strains and perhaps more stringent lockdowns, could put equity investors on the back foot - even if the FTSE 100 is down by a sixth from its August 2018 and January 2020 highs, the index is up by 30% from its March 2020 nadir of 4,994, so some degree of recovery is already expected.

Banks and financial services led stocks that fell in the first post-Christmas trading on 29 December, which analysts say is in response to developments around Brexit and a lack of detail for market operations come 1 January......

Brown Shipley analyst Shanti Keleman attributed the falling UK bank shares to no agreement on financial services equivalency in the Brexit deal", the BBC reported.

"Nerves remain over what deal will be struck in 2021 when it comes to financial services and indeed services overall, which provides a far greater percentage of UK GDP (and the Government's tax take) than fishing or manufacturing" https://t.co/qVZ0aISNOy

2.56pm GMT

The US stock market has opened at fresh record high, with the Dow Jones industrial average gaining 114 points or 0.4% to 30,518.

The broader S&P 500 index is up 0.3%, while the tech-focused Nasdaq gained another 0.2% extending yesterday's gains after Donald Trump signed the $900bn coronavirus stimulus spending bill.

Wall Street's main indexes opened at record highs on Tuesday as bets that fiscal aid will speed up a vaccine-led recovery in the economy boosted sentiment in the final days of the year.

U.S. stock-market benchmarks opened higher at the start of Tuesday, booking another round of intraday records in the holiday-shortened week.
https://t.co/yKbnv4H8IN pic.twitter.com/eWHOQKmAr4

2.39pm GMT

In the US, house prices have surged at the fastest rate in six years, as the pandemic drives families to look for larger houses.

The S&P CoreLogic Case-Shiller national home price index posted a 8.4% annual gain in October, up from 7% in September.

Case-Shiller: National House Price Index increased 8.4% year-over-year in October https://t.co/HtlXbMgpq6 pic.twitter.com/AGMaGI56F0

The coronavirus outbreak has forced millions of Americans to work from home and it's curtailed other activities like eating out, going to movies or visiting gyms. That's leading more people to seek out homes with more room for a home office, a bigger kitchen, or space to work out.

The data from the last several months are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," said Craig Lazzara, Managing Director at S&P Dow Jones Indices.

2.24pm GMT

The UK stock market is holding onto its gains, with the FTSE 100 currently up 2.1% or 139 points at 6641 points.

The pound has risen back over $1.35 against the US dollar too, up half a cent today.

After four and a half years of Brexit back and forth, the news of a Christmas trade deal between the EU and UK has been understandably welcomed by investors. Markets were particularly concerned about a damaging No Deal outcome but the agreement means we can look forward to 2021 with a measure of optimism. UK stock markets have so far reacted positively and should be in a better position to attract flows from international investors as the fog of uncertainty clears.

Sterling is also continuing to trade near this year's high against the US Dollar although the lack of a sharp move suggests a deal was largely priced-in already. The reaction in gilt markets has also been muted with the Bank of England expected to keep interest rates low for the foreseeable future.

Of course, we should not kid ourselves that the deal is an improvement, from an economic perspective, on the UK's membership of the single market. There will be more trade friction than before and there is precious little in the agreement on areas like financial services.

UK sovereignty has been reinforced but the economy still faces a prolonged period of adjustment to the new arrangements and there will no doubt be bumps in the road'. However, as we move into the New Year, the focus of investors will likely now move back to issues such as the vaccine-led recovery from Covid and the impact of a new President in the White House."

2.16pm GMT

12.57pm GMT

Graphcore, the UK maker of chips designed for use in artificial intelligence, has raised $222m (164m) from investors, valuing the company at $2.8bn.

The Bristol-based company's latest round of funding was led by the Ontario Teachers' Pension Plan as well as investors including Fidelity International and Schroders. Existing Graphcore investors, including Baillie Gifford and Draper Esprit, also joined the round.

12.25pm GMT

The oil price has also rallied today, with Brent crude up 1% at $51.37 per barrel.

That takes crude back towards the nine-month highs hit earlier this month.

All three indices on Wall Street closed at all-time highs on Monday and e-mini futures are pointing to another record session today. The positive sentiment also prevailed in Asia where the Nikkei 225 index soared by 2.7% to close at its highest in three decades.

In Europe, most bourses were up only modestly on Tuesday after a strong session yesterday, with the exception of the FTSE 100, as London markets were closed. But London shares were more than catching up today as they surged by 2%.

11.02am GMT

Investment bank UBS predicts that the UK stock market and the pound will rally in 2021, now that the UK-EU free trade deal is agreed.

UBS forecasts the FTSE 100 will rise to around 7,200 points in a year's time - or around 8% higher than today's levels.

The UK is one of our favoured global equity markets, particularly from an unhedged perspective as we suspect a large proportion of the return for international investors will come from the strengthening currency - our FX strategists target GBP/USD 1.44 by end-2021.

Including the 3.9% dividend yield, this would point to a c.21% total USD return from the current level of the FTSE 100. Under a No Deal" Brexit, we would have had a far weaker GBP, and in US dollar terms, UK equities would not be a favoured market."

UBS: The UK is one of our favoured global equity markets, particularly from an unhedged perspective as we suspect a large proportion of the return for international investors will come from the strengthening currency - our FX strategists target $GBPUSD 1.44 by end-2021. pic.twitter.com/KTg0aN1P5Q

UBS: We target 7,200 FTSE 100 for end-2021 and, given our Bullish view on Sterling, would highlight a forecast total USD return (including dividends) of ~21%. We see UK relative valuations recovering from ~20 year lows.

10.03am GMT

Russ Mould, AJ Bell Investment Director, says the markets are giving a mixed response' to the Brexit deal:

The FTSE 100 and FTSE 250 are both up nicely in the early exchanges and sterling is holding on to the $1.35 and 1.10 marks, so markets seem to be welcoming the Brexit deal that was announced on Christmas Eve," says

However, the agreement struck between London and Brussels is yet to win universal acclaim, even if that is the inevitable result of the compromises that the Prime Minister had to make to get the deal over the line before the end of the transition period and confirmation of the UK's departure from the economic bloc.

Multinationals, who are the likeliest beneficiaries of frictionless, tariff-free trade and overseas currency earners are generally leading the charge in the FTSE 100, including Intertek and Diageo. Yet the laggards are nearly all banks and providers of financial services, a trend which can also be seen in the FTSE 250 where asset managers and insurers such as Ninety One and Sabre are among the day's losers.

This suggests that nerves remain over what deal will be struck in 2021 when it comes to financial services and indeed services overall, which provides a far greater percentage of UK GDP (and the Government's tax take) than fishing or manufacturing.

9.30am GMT

#FTSE 100 top risers: #AZN AstraZeneca +4.64%#CPG Compass +4.61%#IHG InterContinental Hotels +4.34%#HLMA Halma +4.21%

#FTSE 100 top fallers: #LLOY Lloyds -3.42%#NWG NatWest -2.99%#BARC Barclays -2.43%#HSBA HSBC -1.11%

9.29am GMT

Britain's blue-chip share index has just hit its highest level in over nine months, as the global rally continues.

The FTSE 100 index is now up 160 points, or nearly 2.5%, at 6662 points, which is its highest point since early March.

9.01am GMT

Here's some early reaction to today's rally:

FTSE 100: +1.8% on first day of trade since the deal but sector divergence is quite big
Airlines/ Hospitality leading (+3-4%) with banks the only names in negative territory -2/3% https://t.co/Ee6c496bFL

U.K. blue-chip stocks soar, leading European country indexes, in the British market's first trading session since a Brexit deal was struck with the EU https://t.co/jxGX7bMxBn pic.twitter.com/7GwXWKtWeF

Global stock mkts rise to fresh highs as US stimulus fuels rally. US House approved 275-134 the $2,000 coronavirus aid checks sought by Trump. Bonds steady w/US 10y 0.94%. Dollar keeps falling w/Euro jumps to $1.2255. Gold $1882. #Bitcoin retreats after stunning rally, now 26.5k. pic.twitter.com/9jKQ7pFp1b

9.00am GMT

Germany's stock market has hit a fresh record high in early trading, with the DAX index up another 0.7%.

That means the DAX is now up 4.8% this year (while the FTSE 100 is still down 12%).

8.51am GMT

The smaller FTSE 250 index, which contains more UK-focused companies, has also jumped in early trading.

It's up 1.6% at 20,874 points, its highest level since late February (the early days of the market crash). Holiday operator TUI is up 9%.

8.40am GMT

Britain's stock market has jumped sharply at the start of trading.

The FTSE 100 has risen by 1.9%, or 123 points, to 6625 points, as dealing resumes following the festive break.

The FTSE 100 has started very positively this morning. It's the first time the market has opened since the Brexit deal was concluded. pic.twitter.com/dGzbGsN8To

We think we have figured out the winning formula and how to get efficacy that, after two doses, is up there with everybody else.

8.05am GMT

Here's Associated Press on Japan's stock market hitting a 30-year peak today:

In Tokyo, the Nikkei 225 jumped 2.7% to 27,568.15, the first time it has traded above 27,000 since August 1990, according to FactSet. The market hit its all-time peak close of 38,915.87 on Dec. 29, 1989.

The benchmark was buoyed by strong gains in heavyweights like Mitsubishi Heavy Industries, which surged 4.6%, apparel maker Fast Retailing, also up 4.6%, and technology and energy company SoftBank, which gained 4.2%.

7.49am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Relief that Donald Trump has signed a $900 billion economic aid package, and that a disorderly no-deal Brexit has been avoided, are driving stock markets towards fresh record peaks today.

Japanese stocks are at a 30-year high! #Japan #Nikkei225 pic.twitter.com/CCBBuoIZEl

European Opening Calls:#FTSE 6578 +1.16%#DAX 13880 +0.65%#CAC 5614 +0.45%#AEX 630 +0.34%#MIB 22346 +0.26%#IBEX 8194 +0.48%#OMX 1894 +0.42%#IGOpeningCall

With the Brexit ... and the U.S. stimulus deal now in the rear-view mirror, there is a sense of relief that we have avoided the respective worst-case scenarios," said Stephen Innes, chief global market strategist at Axi, a broker.

Britain clinched a narrow Brexit trade deal with the EU on Thursday, just seven days before it exits one of the world's biggest trading blocs.

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