FTSE 100 sets up for Santa’s Rally as oil soars

The FTSE 100 was heading for a Santa’s Rally as higher oil prices helped lift London’s leading index on Monday.

Brent oil prices were 3% higher at the time of writing on Monday after major oil and shipping companies said they were rerouting their vessels away from the Red Sea after Houthi rebels conducted a series of drone attacks over the weekend.

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BP and Shell were 2% and 1.5% higher after BP said they would avoid the area, and oil prices touched the highest levels in over a week.

The commodity-heavy FTSE 100 didn’t share the enthusiasm evident in US stocks after the Federal Reserve signalled they would hike rates in 2024. However, a rally in oil provided London with its own version of festive cheer as miners joined in BP and Shell’s rally.

The FTSE 100 is over 2% higher in December so far and is well placed to provide investors with an early present in the form of a Santa’s rally.

Vodafone was the FTSE 100’s top riser following reports that the telecom giant is seeking to dispose of its Italian business through a merger or disposal. Some areas of Vodafone’s European business have dragged on performance, and getting rid of their Italian unit will be welcomed by shareholders.

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Vodafone shares were 3.5% higher at the time of writing.

Rolls Royce ticked higher on Monday after reports they were eyeing the deployment of mini-nuclear reactors in Ukraine, demonstrating they are not just a jet engine maker.

“There was a reminder that Rolls-Royce – one of the best performing stocks anywhere this year – has more strings to its bow than making engines for airplanes, amid newspaper reports it is in talks to provide small modular reactor technology to Ukraine as the country looks to build out its nuclear power capacity,” said AJ Bell investment director Russ Mould.

“The modest move in the share price suggests shareholders are not expecting any near-term impact on profit or cash flow, however.”

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