The Santa rally is coming to town: FTSE 100 jumps 6% in just four days after starting the week at its lowest point of 2014
The much anticipated Santa rally came to town this week as the FTSE 100 leapt by almost 6 per cent in just four days.
After closing at its lowest level this year on Monday, the index of leading London shares closed up another 79.3 points, or 1.2 per cent, at 6,545.3, to cap off its best week for three years.
That took the Footsie's gains for the week to 245 or nearly four per cent and investors will be hoping the festive rally spreads into next week, particularly as the rally has only clawed back some of the losses made the previous week.
Santa rally: The FTSE 100 has bounced back from its year low hit on Monday
The week's surge was the biggest since December 2011 and it added £62billion to the value of Britain’s biggest listed companies.
The stock market fell every day in December, with the Footsie tumbling 8.3 per cent or 560 points in just six sessions from the start of trading on Monday last week to the close of trading on Monday this week, when it closed at its year low of 6,182.7.
Investor sentiment took a battering on fearful sentiment over the falling oil price and Russian crisis.
But four days of gains have seen the Footsie add 363 points – although it still remains down on the start of the month.
Traditionally, December is good for shares, with the effect dubbed the Santa rally seeing the index rise by an average of 2.5 per cent during the month since 1984 and only fall four times.
Last year the Footsie also fell in the first half of the month, before recovering to close December up 1.4 per cent.
Chris Beauchamp, market analyst at IG, said: ‘Having gained 6% from the lows the question could justifiably be asked where the next reason for a rally is coming from, but this question is easily answered by the simple fact that it is nearly Christmas and hallowed tradition requires markets to remain cheery until the end of trading next Wednesday.
‘Oil has risen by around 1.3% today and this has allowed the bargain hunters a further excuse to buy shares in the likes of Tullow Oil and BP, while the festive cheer has extended even to such dire performers as Tesco and Morrisons, with the former up 5 per cent and the latter rising over 3 per cent.
‘European markets have been weaker but patient investors have been rewarded, as the overnight froth dissipates and buyers find an opportunity to step in at more congenial levels.’
Investors have been buoyed by indications from the US Federal Reserve that it is in no hurry to raise interest rates.
New York's Dow Jones Industrial Average last night jumped by 420 points or 2.4% in its biggest one-day surge in three years, even though oil prices have remained under pressure at below 60 US dollars for a barrel of Brent crude.
Today the US Dow Jones IA was down 0.1 per cent at 17,765 at 5.30pm London time, while the S&P 500 was up 0.1 per cent. In Europe, Germany’s Dax closed down 0.25 per cent, while Italy’s FTSE MIB fell 0.4 per cent and France’s CAC40 slipped 0.2 per cent.
On the up: The biggest gaining shares on the FTSE 100 today
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