Will Santa bring a festive boost?
WILL there be a Santa Rally this year? That is the question on the lips of many investors following a turbulent 11 months on the stock market in London.
Research from savings and investment firm Hargreaves Lansdown suggests those hoping for a strong end to the year could be in luck. December is traditionally the best month for the UK stock market – making a positive return 86pc of the time since 1985 and an average return of 2.6pc.
The next best month is April – suggesting Easter Rallies are also common – with the market rising 77pc of the time with an average return of 2.3pc.
‘Stock market history suggests Santa really does deliver gifts to investors in December with surprising regularity,’ said Laith Khalaf, senior analyst at Hargreaves Lansdown.
‘Looking back over the past 30 years, December has been the best month for UK shares, which have risen almost nine times out of every ten years.
‘Investors should certainly not be investing for just one month, but for those who are currently thinking of investing in the stock market, history indicates they stand a good chance of getting off to a good start.’
But he added that this scenario was far from guaranteed.
‘No one can really explain this seasonal phenomenon, so don’t be too surprised if it turns out to be one of those years when Santa stays in his grotto.’
There was little sign of festive cheer in trading rooms yesterday as the FTSE 100 index drifted 19.06 points lower to 6356.09, although the FTSE 250 was up 155.60 at 17,420.70.
European markets fared far better as investors on the Continent bet that the European Central Bank will deliver a new dose of stimulus to the ailing eurozone economy on Thursday. The Dax was up 0.78pc in Frank- furt and the Cac rose 0.56pc in Paris while the main benchmark in Milan gained 0.63pc and Madrid was up 0.74pc.
Among the blue-chip risers in London was InterContinental Hotels Group (IHG), the hotels giant behind the Holiday Inn chain.
It is thought the company is being pursued by three Chinese suitors – Shanghai Jin Jiang International Hotels Group, the airlines owner HNA Group and the sovereign wealth fund China Investment Corp.
The Chinese trio were interested in buying Starwood, which owns the Sheraton chain, before rival Marriott swooped last month with an £8bn takeover bid.
They are now expected to turn their attention to IHG, which also owns the Crowne Plaza and InterContinental brands and runs more than 4,900 hotels with almost 730,000 rooms. Shares in IHG rose 67p to 2556p to value it at around £5.8bn.
Glencore was also in favour, although the rise of 4.83p to 96.71p will only be of small consolation to shareholders who have seen the stock crash from a 2011 float price of 530p. The sell- off has been particularly aggressive, with shares down 69pc since their 2015 high of 313.3p in late April.
Building stocks continued their march higher in the wake of last week’s Autumn Statement when the Chancellor announced plans to kick-start the ‘biggest housebuilding programme since the 1970s’.
The house-building sector has been one of the biggest winners since the General Election as low interest rates, rising wages and Government schemes to help buyers on to the housing ladder boost demand at a time of short supply. In the FTSE 100, Barratt Developments was up another 13.5p to 601p yesterday, while Taylor Wimpey gained 5.9p to 194.6p, Berkeley rose 76p to 3211p and Persimmon rose 38p to 1915p. Smaller rivals were also on the rise, with Bellway up 72p to 2616p, Bovis Homes climbing 29p to 952.5p and Redrow lifting 17.2p to 454.2p.
Analysts at Berenberg downgraded TalkTalk to ‘sell’ from ‘hold’ and slashed its target price from 290p a share to 208p in the wake of October’s cyber- attack which resulted in the theft of data concerning some of the phone and broadband provider’s four million customers.
‘We believe TalkTalk’s plan to improve margins significantly faces tough challenges, made more difficult by the recent cybercrime attack,’ the bank said yesterday in a research note.
Shares in TalkTalk, which peaked above 400p in June, fell another 4.1p to 240p.
Yorkshire-based chemicals company Croda International rose 98p to 2868p after Goldman Sachs put the stock on its closely watched conviction buy list and set a price target of 3400p.
Analysts at Goldman expect earnings to pick up thanks in part to improvements in its personal care business, which makes chemicals for products including sun cream, lipstick and deodorant.