• FTSE 100 closes 100 points higher
  • US stocks see gains fade as Senate stimulus approval eyed
  • AstraZeneca lifted by imminent coronavirus vaccine clearance hope

4.45pm: Strong return after the holidays

The FTSE 100 index closed the first session back after the holidays with a triple-digit gain as it played catch-up from Monday’s break boosted by the Christmas Eve Brexit deal, a $2.3 trillion US stimulus package, and coronavirus vaccine hopes.

However, the Footsie finished off its best levels as US blue-chips reversed marginally into the red after notching up fresh record highs at open, with approval from the Senate still needed for the massive US stimulus package.

At the close, the UK blue-chip index was up 100.54 points, or 1.6% at 6,602.65, albeit well below the session peak of 6,676.60.

At the same time in New York, the Dow Jones Industrial Average was down 5 points at 30,399, while the Nasdaq Composite shed 0.1%, although the S&P 500 index managed to hold 0.1% higher.

Joshua Mahony, senior market analyst at IG, commented: “The short-term benefits we have seen for global stocks are a reflection of the goldilocks scenario of breakthroughs in both Brexit and US stimulus negotiations. Nevertheless, the indecision seen in US markets today highlights the somewhat mixed outlook beyond the initial boost.

“With elevated Coronavirus cases around the world restricting economic activity, traders do have a largely depressing Q4 earnings season to look forward to. However, the 2021 recovery pathway will be influenced greatly by the rate of vaccinations, with EU forecasts likely to be hit if rumours of a delayed February approval of the AstraZeneca drug are true.”

He added: “In the short-term, markets will be focused on the potential for a enhanced $2000 per person direct payment if approved in the Republican-controlled Senate. However, should the $2000 payout fail to get the votes this time around, there is hope that the numbers would improve once Joe Biden comes into office next month.

“The upcoming Georgia Senate runoff will determine what type of Biden Presidency we will get, with an unlikely double Democrat victory providing expectations of a ramp-up in government spending. Nevertheless, while Biden is likely to face a split Congress, this would likely mean a normalisation of global trade ties without the more extreme ends of Biden’s policy mix.”

Mahoney concluded: “The pound has been held back through a mix of soaring covid cases and fear of a bumpy Brexit road ahead. While nations prepare for a year of sharp growth, there is more uncertainty for the UK given the simultaneous exit from the EU.

“Hospitals are becoming increasingly stretched by the covid surge seen over recent weeks. With Christmas celebrations likely to see another flare-up in cases this week, there is a feeling that we could soon enough see Tier 5 restrictions put into place in a bid to arrest the current spread.”

2.45pm: Gains on both sides of the pond

The FTSE 100 index held firm in midafternoon trading as US stocks posted fresh record highs in opening deals Tuesday as hopes a $2.3 trillion stimulus package and a vaccine-led economic recovery boosted sentiment in the final days of 2020.

The UK blue-chip index was off earlier highs but still up 122 points, or 1.9% at 6,624.59.

In New York, the Dow Jones Industrial Average rose 88.1 points, or 0.29%, at the open to 30,492.07. The S&P 500 added 14.7 points, or 0.39%, to 3750.01, while the Nasdaq Composite gained 66.0 points, or 0.51%, to 12,965.388 at the opening bell.

Edward Moya, senior market analyst, New York at OANDA commented: “US stocks are rising once again on stimulus hopes. The House passed the bill to increase stimulus payments from $600 to $2000, clearing the 2/3 majority needed for passage as 44 Republicans voted alongside Democrats.  

“The bill now goes to the Republican-controlled Senate and it is unclear what will happen next.  Senate Majority Leader McConnell will have to decide if he will present this bill for a vote.  Even if the effort for bigger checks fails now, the goalposts have been moved and the Biden administration will have a better chance of passing additional stimulus once he is inaugurated. 

“What complicates the stimulus debate is the upcoming Georgia Senate runoff races. If a Senate vote is called, both Georgia Senators Perdue and Loeffler will have to decide if they support the President’s initiative to increase stimulus payments.  Unemployment remains elevated in Georgia rising from 227,700 in October to 296,200 in November and that could motivate many to vote.”

Moya added: “Risk appetite is limited as thin trading conditions persist and will likely consolidate unless the prospects of a stimulus stem out of the Senate.  The Senate might make a counteroffer and that could provide some upside for global equities. 

“Stocks pared some gains after Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases delivered cautious comments that the January levels of the virus could be worse than December. The Christmas surge is expected to deliver the last peak of the virus and should raise expectations for more lockdowns over the next few weeks.”

Tech giants Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG) were all among the risers, though electric vehicle star Tesla (NASDAQ:TSLA) was in reverse.

The top risers in London were led by newly FTSE 100 promoted Pershing Square (LON:PSH), the investment trust that tracks Bill Ackman’s hedge fund, followed by DIY retailer Kingfisher (LON:KGF) and Guinness and Smirnoff maker Diageo (LON:DGE).

Banks continued to be the big losers, led by those most focused on the UK, Lloyds (LON:LLOY) and NatWest (LON:NWG), as traders react to the Brexit deal agreed before the Christmas break.

12.45pm: Welcome return after festivities

The FTSE 100 index remained bullish at lunchtime on Tuesday, the first session back since Christmas, amid expectations for further gains today on Wall Street.

The UK blue-chip index was up nearly 140 points, or 2.1%, at 6,642.01.

US stocks are forecast to build on the rise to record highs seen on Monday underpinned by hopes a $2.3 trillion stimulus package signed into law by President Trump on Sunday will be approved by the Senate.

The package covers $1.4 trillion in spending to fund government agencies and $892 billion in coronavirus (COVID-19) relief, including $2,000 relief cheques to help cushion the economic impact of the pandemic. The Democratic-controlled House on Monday approved the legislation, but the proposal faces an uncertain future in the Republican-controlled Senate.

Dow Jones index futures pointed to a 0.5% higher open, having gained over 200 points, or nearly 0.7%, to close at 30,403,97 on Monday. S&P 500 futures were also up 0.5%, and Nasdaq 100 futures added 0.4%.

But demand for riskier assets weakened the US dollar, often seen as a safe-haven asset, which lost 0.2% against a basket of currencies and eyed the 18-month low hit in November.

The US economic calendar includes advance data on November trade in goods at 8.30am EST, the Chicago purchasing managers index for December at 9.45am EST, and November pending-home sales data at 10.00am EST.

On the US corporate front, Boeing shares were higher in pre-market New York trade as the aircraft maker’s troubled 737 Max plane was slated to carry airline passengers on a flight Tuesday for the first time in around two years, according to news reports.

Britain’s blue-chip shares rose on their first day of trading since the Christmas Eve agreement of a trade deal with the European Union, led by companies in a range of sectors likely to benefit from the deal.

Also among the gainers was drugmaker AstraZeneca buoyed by news its COVID-19 vaccine is set to be granted emergency use approval within a few days by the UK government.

10.00am: Season of goodwill continues

Up, up and away! Fit and refreshed/fat and depressed (delete according to your own assessment) after the Christmas break, investors are piling into UK equities.

The FTSE 100 was up 173 points (2/7%) at 6,675.

‘’The unwrapping of the Brexit deal and a stimulus package for the US economy have propelled shares higher in Europe, with another boost of optimism, now foundations are being laid for a sustained recovery,” suggested Hargreaves Lansdown’s Susannah Streeter.

“The mobilisation of huge vaccination programmes are an extra shot in the arm, helping to offset concerns about spikes in cases,” she added.

The FTSE 100’s advance has been tempered somewhat by sterling’s strength; the pound is currently buying US$1.3473, which is about a quarter of a cent more than it was buying at midnight.

Only five FTSE100 shares down this morning and I hold three of them. Bah, humbug to the Santa rally.

— Rodney Hobson (@RodneyHobson) December 29, 2020

8.35am: Stocks zoom higher after Dow Jones index hits new high

The FTSE 100 flew out of the traps this morning, playing catch-up with US markets, which put in a strong showing yesterday.

London’s index of leading shares was 102 points (1.6%) higher at 6,604, with British Airways owner International Consolidated Airlines (LON:IAG) leading the way with a 4.1% gain at 170.05p.

There was a positive reaction to AstraZeneca PLC’s (LON:AZN) announcement this morning about approval for its Lynparaza cancer treatment to be used in Japan for the treatment of advanced ovarian, prostate and pancreatic cancers.

“The Astra/Zeneca Covid-19 vaccine’s approval, blissfully available in large quantities and at room temperature, is imminent, likely this week. It will be a game-changer for Her Majesty and her subjects. Britain is down, but not out, although I acknowledge that all of the above will act as a cap on gains in UK asset markets this week,” said OANDA’s |Jeffrey Halley, who sounds like he watched a few too many black & white war films over the Christmas break.

Only a handful of blue-chip stocks were in the red, among them banking giants Barclays PLC (LON:BARC) and NatWest Group PLC (LON:NWG), down 1.1% and 0.2% respectively. Pundits are still picking over the bones of the Brexit agreement but there is already a consensus that the deal has not been as good for the UK financial services industry as hoped.

Among the small caps, Powerhouse Energy Group PLC (LON:PHE) rocketed 23% higher to 8.15p after it was revealed Chris Vanezis, the chief financial officer, had sold 4.1mln shares received in lieu of his fees for services rendered. The shares were sold at 6.73p each, leaving Vanezis with a 0.71% stake in the waste-to-energy firm.

7.30am: London to play catch-up

After the long weekend break, London’s blue-chip equities look set to resume on the front foot.

Spread betting quotes indicate the FTSE 100 will open at around 6,598, up 96 points after US markets put in a strong shift on Boxing Day.

The Dow Jones industrial average advanced 204 points to close at 30,404 and the S&P 500 climbed 32 points to 3,735.

In Asia this morning, the Nikkei 225 was up 714 points at 27,568 in Tokyo while in Hong Kong, the Hang Seng was 250 points to the good at 26,564.

As one might expect at this time of year, trading volumes have been thin.

Although there continues to be news on which traders can pull their triggers, in terms of stock-specific items involving the big guns, there has been little to react to.

This morning, AstraZeneca PLC (LON:AZN) said Lynparza (olaparib), the drug it has developed with MSD (Merck & Co), has been approved in Japan for the treatment of advanced ovarian, prostate and pancreatic cancers.

Car insurance group Admiral Group PLC (LON:ADM) has sold off its Confused.com price comparison business and other bits & bobs to PG Comparison Services Holdings for £508mln, although the proceeds to Admiral, net of minority interests and transaction costs, will be around £450mln.

Around the markets:

  • Sterling: US$1.3500, up half a cent
  • 10-year gilt: 0.256%
  • Gold: US$1,881.80 an ounce, up US$1.40
  • Oil: US$51.28 a barrel, up 38 cents
  • Bitcoin: US$26,235, down US$399

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