London close: Stocks kick off new year in positive mood
London stocks closed in positive territory on Monday, kicking off the new year in style amid optimism over the latest Covid vaccine rollout, while deal news also provided a boost.
The FTSE 100 ended the session up 1.72% at 6,571.88, and the FTSE 250 was 0.24% firmer at 20,537.89.
Sterling was in the red, however, last falling 0.65% against the dollar to $1.3583, and losing 1.03% on the euro to €1.1070.
“The FTSE 100 is the standout performer of European indices as mining and pharma stocks have boosted the British index,” said CMC Markets analyst David Madden.
“A rally in industrial metals has lifted BHP Group, Rio Tinto, Glencore and Anglo America and they are some of the biggest risers on the FTSE 100 in terms of index points.
“Sterling’s move lower has benefitted companies like GlaxoSmithKline, AstraZeneca, Reckitt Benckiser, Unilever and Diageo as they all have relatively large foreign revenue streams so the fall in the pound benefits their sales.”
Madden also noted that the start of the rollout of the AstraZeneca-Oxford University Covid-19 vaccine was also behind broader positive moves in European stocks.
The gains in equities came despite the prospect of a new national lockdown for England, with Prime Minister Boris Johnson set to address the nation at 2000 GMT to outline what 10 Downing Street described as the ‘next steps’ for the country.
Earlier in the afternoon, Scotland’s First Minister Nicola Sturgeon announced new rules for the UK’s second-largest nation, with stay-at-home orders being implemented from midnight and schools to be closed until at least February.
“The UK is in for tougher restrictions as Scotland will enter a national lockdown from midnight and Prime Minister Johnson will address the nation this evening and there is chatter of harsher measures being announced for England,” David Madden said.
“Domestic transport stocks are suffering because of lockdown fears and National Express, FirstGroup and Go-Ahead Group are all down over 5%.”
On the macroeconomic front, a survey released earlier showed manufacturing activity hit a three-year high in December as factories rushed to finish work before the deadline for Brexit trade talks.
The IHS Markit/CIPS purchasing managers' index rose to 57.5 from November's 55.6.
It was the highest reading since November 2017, and was slightly ahead of a preliminary estimate of 57.2.
“The manufacturing PMI rose to its highest level in over three years in December, mainly reflecting a boost from last-minute preparations before the end of the Brexit transition period,” said Rob Dobson, IHS Markit's director.
“It seems likely that this boost will reverse in the opening months of 2021, making for a weak start to the year.”
Separate figures from the Bank of England showed mortgage approvals hit their highest level since before the financial crisis in November as buyers rushed to arrange finance during the Chancellor's stamp duty holiday.
Net mortgage borrowing rose to £5.7bn from £4.7bn a month earlier - the highest since March 2016 - and lenders approved 105,000 loans, up from 98,300 in October.
The number of approvals was the most since August 2007 - the month before Northern Rock's near-collapse heralded the credit crunch.
November approvals were well ahead of analysts' average forecast of 83,500.
Interest rates on newly drawn mortgages rose 5 basis points to 1.83% - little changed since January and up from a low of 1.72% in August.
In equity markets, Entain surged 27.65% after the Ladbrokes owner rejected a proposed offer from its US partner MGM Resorts International valuing it at about £8.1bn.
Entain said it had told MGM that the proposal "significantly undervalues" the company, and also asked for more information about the strategic rationale for combining the companies.
Precious metals miners were on the rise as gold prices shone, with Fresnillo, Polymetal, Hochschild and Centamin all higher, by 10.58%, 9.32%, 7.8% and 8.63%, respectively.
Miners also gained in tandem with metals prices, with Anglo American, Glencore, BHP and Rio Tinto all up by a respective 6.08%, 5.32%, 5.71% and 5.17%.
Travel company TUI shot 4.67% higher after its chief executive said he expects trading to return to normal this summer.
On the downside, banks and housebuilders lost ground, while Rolls-Royce fell 7.24% after the Financial Times reported that the engine maker will be putting its UltraFan engine programme "on ice" when testing finishes in 2022.
JD Sports Fashion fell 5.3%, after a rating downgrade at Exane.
Market Movers
FTSE 100 (UKX) 6,571.88 1.72%
FTSE 250 (MCX) 20,537.89 0.24%
techMARK (TASX) 4,118.33 0.00%
FTSE 100 - Risers
Entain (ENT) 1,416.00p 25.28%
Fresnillo (FRES) 1,249.00p 10.58%
Polymetal International (POLY) 1,841.50p 9.32%
Anglo American (AAL) 2,572.00p 6.08%
BHP Group (BHP) 2,035.00p 5.71%
Glencore (GLEN) 245.40p 5.32%
Rio Tinto (RIO) 5,753.00p 5.17%
Experian (EXPN) 2,909.00p 4.75%
Evraz (EVR) 492.70p 4.35%
Antofagasta (ANTO) 1,502.00p 4.27%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 103.20p -7.24%
International Consolidated Airlines Group SA (CDI) (IAG) 150.40p -6.23%
JD Sports Fashion (JD.) 816.20p -5.30%
NATWEST GROUP PLC ORD 100P (NWG) 159.05p -5.28%
Taylor Wimpey (TW.) 157.80p -4.83%
Lloyds Banking Group (LLOY) 34.83p -4.40%
Barratt Developments (BDEV) 649.80p -2.99%
British Land Company (BLND) 475.70p -2.70%
Whitbread (WTB) 3,018.00p -2.65%
Next (NXT) 6,912.00p -2.46%
FTSE 250 - Risers
Centamin (DI) (CEY) 134.35p 8.08%
Hochschild Mining (HOC) 224.00p 7.80%
Gamesys Group (GYS) 1,198.00p 5.09%
Homeserve (HSV) 1,077.00p 5.07%
Ferrexpo (FXPO) 296.20p 4.81%
TUI AG Reg Shs (DI) (TUI) 477.90p 4.67%
Electrocomponents (ECM) 906.00p 4.08%
Renishaw (RSW) 5,990.00p 3.99%
Weir Group (WEIR) 2,065.00p 3.69%
Future (FUTR) 1,798.00p 3.68%
FTSE 250 - Fallers
Network International Holdings (NETW) 293.20p -10.23%
Aston Martin Lagonda Global Holdings (AML) 1,806.00p -10.10%
FirstGroup (FGP) 67.15p -8.38%
easyJet (EZJ) 767.00p -7.86%
Hammerson (HMSO) 23.12p -6.96%
Carnival (CCL) 1,276.00p -6.66%
Wetherspoon (J.D.) (JDW) 1,053.00p -6.54%
Mitchells & Butlers (MAB) 229.50p -6.03%
Crest Nicholson Holdings (CRST) 306.60p -5.89%
Babcock International Group (BAB) 266.20p -5.43%