The FTSE 100 was rising in thin volumes on Thursday morning as investors started to wind down for the festive period. The FTSE 100 was 0.3% higher at 7,526 at the time of writing.
London’s leading index gained despite news the UK economy contracted more than expected in the third quarter. It is now widely assumed the UK is currently in a recession but there is also an argument the volatility we experienced earlier in the year had already priced any downturn.
“The hoped-for Santa rally is running merrily through markets, but it may end up being a short-lived ride given the cost-of-living winds swirling, the confirmation that the UK is rolling into recession and worries about global economic growth,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“The ONS update showing the economy contracted by 0.3% in the third quarter is bleaker than first forecast but the FTSE 100 and the FTSE 250 have shrugged it off, largely because a UK recession has already been priced in.”
For the FTSE 100 to achieve a Santa rally and produce a positive performance in December, the index would have to close the month out above 7,573.
There were steady gains across most industry sectors on Wednesday with cyclical shares moving higher. Shell was the top gainer.