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
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.
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.
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.
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
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%).
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%.
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.
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%.
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.
“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.