he FTSE 100 was set to rise today despite the chaotic scenes on Capitol Hill as investors took a longer term view of the Democratic election victory.
As the anarchic behaviour in Washington DC was quelled, global markets raced ahead today, with Japan today following Wall Street’s gains and European markets being called up before trading opened.
The FTSE 100 was predicted to rise 36.2 points to 6887.6 by traders on IG Index’s platform as US futures suggested further gains would be seen there this afternoon. CMC Markets traders saw the FTSE rising 47, with Germany’s Dax also up 47 at 19938 and France’s CAC 40 up 36 at 5665.
UK stocks took a surging run yesterday, with a 3% leap, as it sought to catch up on the gap between Britain and other leading countries’ stock market valuations.
The index’s heavy weighting in old fashioned banking, mining and oil stocks has been behind its gains as commodities prices improved.
The Brexit trade deal took much of the fear about disruption and tariffs out of the UK exit from the EU, further boosting sentiment on UK stocks.
Such long-term factors as a future stimulus package in the US with Democrat control of both houses, a calmer Brexit and Covid-19 vaccine rollouts have enabled investors to overcome worries about Britain’s prospects and buy stocks.
However, UK shares are still relatively cheap compared with other countries’ and that is likely to trigger a bumper year for activist investors forcing boards into dramatic turnaround actions, according to reports in the Financial Times today.
It cited companies with poor records on ESG – environmental, social or governance issues – as being particularly vulnerable.
Investors and analysts have cited Travis Perkins and Serco as potential activist targets.
Not all markets were strong today. China and Hong Kong both took a bath as the New York Stock Exchange flip-flopped on its earlier pledge to rescind a Trump-inspired order kicking out three major Chinese stocks.
Oil stocks everywhere are strong after Tuesday’s big cut in output from Saudi Arabia. Inventories are falling sharply, indicating growing demand for the black gold, driving oil prices to 11 month highs.
Eurozone inflation data will be closely watched later this morning with analysts predicting a fall of 0.2%, compared with minus 0.3% the previous month.
Yesterday’s jobs report in the US disappointed and further numbers out today will give a deeper understanding of how much the recovery there is running out of steam, as will the ISM economic barometer, which is expected to show a slowdown from last month’s figure.