Christmas comes early for investors as FTSE 100 hits all-time high
THE FTSE 100 leapt to a record all-time high yesterday as investors finally got in the festive mood, aided by the slipping pound.
A little late to the party, this year’s “Santa rally” – the phenomenon whereby cheery investors boost stocks the week before Christmas – pushed the UK’S blue-chip index over 7,600 for the first time.
While the US’S major stock indices have posted multiple record highs in 2017, the FTSE 100 has had a lacklustre second half of the year, having only inched past May’s record in October before retreating again.
Festive cheer and the pound retreating as much as 0.5pc against the dollar, despite US GDP growth being revised down, propelled the index 78.76 points higher to 7,603.98, a 1.1pc jump.
Energy and mining stocks did much of the heavy lifting, while private hospital owner Mediclinic soared 43p to 630p, its highest share price in two months.
One of the best performing sectors in 2017, housebuilders, missed out on the move higher after the Government unveiled a clampdown on “feudal” leasehold practices.
Under the plans, selling new leasehold homes will be banned, ground rents on new long leases in England will be set to zero, and leaseholders will be able to buy out their freeholds more easily.
Sajid Javid, Communities Secretary, argued that home buyers were being
“exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms” and that an “overwhelming response” from the public had prompted the move to end the practice.
Buoyed by governmentfunded schemes to tackle the UK’S housing crisis such as Help to Buy, housebuilders’ stocks have had a strong year in London.
But yesterday the sector pulled back with Taylor Wimpey, which had to set aside £130m to convert controversial “doubling” leases, slipping 0.6p to 205.4p and retirement home specialist Mccarthy & Stone, the most affected by the proposals, plunging 16.1p, or 9.5pc, to 153.6p.
FTSE 100 peers Berkeley and Persimmon nudged down just 40p to £41.70 and 21p to £27.01, respectively.
Elsewhere, Holiday Inn owner Intercontinental
Hotels jumped 97p to £47.03 after telling shareholders that Donald Trump’s corporate tax cuts would slash its tax bill by “mid to high single digit percentage points” in 2018.
The company said that its tax bill in 2017 would still be in the low thirties, with 64pc of its earnings generated in the US. Morgan Stanley instantly upgraded its earnings estimates for the company next year by 10pc. Fast fashion giant Asos climbed 220p to £66.70 after RBC Capital Markets told clients that its competitive advantages should help it sustain its high levels of growth.
The e-tailing giant, which is the largest firm by market cap on London’s junior Aim market, has built “increasingly defendable competitive moats” such as customer loyalty.