The FTSE 100 soared on Tuesday in a broad rally driven by London’s heavyweight stocks including Shell, AstraZeneca, and HSBC.
Another record high for the S&P 500 overnight proved to be ample reason for equity bulls to buy into London’s blue chips on Tuesday, sending the index 0.9% higher to 8,388 and within touching distance of all-time record highs.
The FTSE 100 has flirted with the 8,400 level numerous times this year but has failed to break through the psychological level meaningfully, leaving all-time record highs at 8,445 just out of reach.
That said, the festive season may provide the conditions needed for London’s flagship index to do what US indices have done on many occasions this year and break to a fresh record.
A lack of macro influences on markets on Tuesday and the broad nature of the rally suggests investors are gearing up for a Santa’s rally by building positions in beaten-down large-cap shares before the end of the year. The gains on Tuesday likely reflect the actions of bargain hunters instead of out-and-out exuberance.
“The year is, effectively, done & dusted. Certainly, nobody is going to be making their year as Christmas approaches, but plenty would find it very easy to break it,” said Michael Brown Senior Research Strategist at Pepperstone.
“Consequently, liquidity tends to dry up and volumes thin out, as markets become a mix of position squaring as books are closed up, and portfolio window dressing as the dreaded task of writing year-end investment letters looms.”
BP and Shell were firmly bid as investors picked up the oil majors and locked in benchmark-beating yields after a prolonged period of poor performance.
AstraZeneca touched its highest level since the beginning of November as the pharma giant continued to rebound above 10,000p, having fallen from highs above 13,000p.
Easyjet was among the top risers after UBS and Barclays hiked their price targets for the airliner. UBS had the most ambitious target of 845p compared to Easyjet’s current price of 566p.
Vistry was down 0.3%, and it looks increasingly likely that the housebuilder will be ejected from the FTSE 100.