UK stocks hit highest level since February 2020

The FTSE 100 index hit its highest level since February 2020 on Christmas Eve, boosted by the recent global stock rally as some concerns about the Omicron coronavirus variant eased from the market.

The UK’s main stock benchmark rose 0.4 per cent to 7,403.65, its highest level since a coronavirus market auction in early 2020. Friday’s gain, made in a single The trading session shortened the holiday, then failed, causing the index to move sideways against the previous Close.

The recovery of UK stocks from pandemic lows has been relatively slow. Unlike most of the other major global indices, the FTSE 100 has yet to return to its early 2020 highs, and is even shy of the all-time high of 7,903.50 it touched. in 2018. In contrast, the S&P 500 has recouped the losses caused by the pandemic. in August of last year and has hit a string of records ever since. The Japanese euro Stoxx 50 and Nikkei 225 have also surpassed pre-Covid peaks in recent months.

The UK’s underwhelming performance is partly due to the lack of the high-growth tech companies that have fueled the relentless rally in US stocks. Instead, the FTSE – which is dominated by mining companies, oil companies and banks – is more focused on so-called “value” sectors, which tend to do well at times. strong global growth.

Rebased line graph in local currency shows UK reserves not yet back to pre-pandemic levels

The persistent threat from the coronavirus, most recently Omicron, has held back value stocks, according to Luca Paolini, chief strategist at Pictet Asset Management.

“Next year, if you have an amazing period of global growth in the opposite direction, then the value will come back,” said Paolini. “That means the UK is back.”

The FTSE’s year-end optimism – it has risen 1.4% this week – follows a period of volatile trading. The index dropped in late November following the discovery of Omicron and changed again as the variant rapidly spread in the UK and elsewhere.

The recent rally shows that investors believe the latest Covid-19 resurgence – which is not stopping the Bank of England from raising interest rates for the first time since the pandemic began earlier this month – will not derail the economic recovery.

https://www.ft.com/content/ac0d3cc0-1d5c-434f-aa6f-32a8d0053f2f UK stocks hit highest level since February 2020

Huynh Nguyen

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