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London shares closed at their highest in nearly 10 months amid relief among investors that the UK and the EU had secured a last-minute trade deal.
With the city open for business for the first time since the deal was agreed to late on Christmas Eve, traders ignored an increase in the number of new Covid-19 cases and welcomed the avoidance of a Brexit. whitout deal.
The FTSE 100 rose 1.5% to close an additional 100.5 points at 6,602, its highest level since early March, when the stock market was sliding in the first wave of the pandemic.
Stocks of multinational companies and those heavily reliant on imports were among the top performers, but bank stocks fell due to disappointment that the UK-EU trade deal would make life more difficult. for the financial services sector.
FTSE chart
After having risen 2.5% in early trading, the FTSE 100 rally lost momentum as the day progressed, without receiving a boost from Wall Street stocks reaching new record highs when business began in New York. . The US market was fueled by hopes that the latest stimulus package agreed to by Donald Trump and Congress will lead to a faster recovery in the world’s largest economy next year.
Richard Carter, head of fixed income research at Quilter Cheviot, He said investors were relieved a messy no-deal Brexit had been avoided.
“After four and a half years of back and forth Brexit, the news of a Christmas trade deal between the EU and the UK has been understandably well received by investors. Markets were particularly concerned about a detrimental no-deal outcome, but the deal means that we can look to 2021 with some optimism. UK equity markets have reacted positively so far and should be in a better position to attract international investor inflows as the fog of uncertainty lifts. “
The FTSE 250, which includes more UK-focused companies, jumped 1.7% to close at its highest since late February.
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Russ Mold, chief investment officer at AJ Bell, said the markets seemed “to welcome the Brexit deal.” However, he warned that the rally could be short-lived.
“The agreement reached between London and Brussels has not yet been acclaimed by all, even if that is the inevitable result of the compromises that the prime minister had to make to get the agreement passed before the end of the transition period and confirmation. the UK’s exit from the economic bloc, “said Mold.
“A double dip recession, thanks to new viral strains and perhaps tighter locks, could put equity investors on the defensive.”
