27 December 2023
Market report: FTSE 100 rises from Christmas slumber
- FTSE 100 opens higher after festive break, with miners on the front foot.
- European indices in positive territory taking a lead from Asia and Wall Street.
- Mood of positivity amid hopes of soft landing for US and more stimulus for China’s economy.
- Retailers return in lacklustre fashion after post-Christmas sales expected to disappoint.
Susannah Streeter, head of money and markets, Hargreaves Lansdown
‘’The FTSE 100 has risen from its Christmas slumber with gains in early trade as positivity pulses through financial markets. There are hopes of a soft landing for the US as inflationary forces slow, borrowing costs are forecast to drop and consumers remain resilient. There are also expectations that authorities in China will move to stimulate the economy through lower borrowing costs next year. Mining stocks are among the biggest gainers in early trade as investors assess the potential knock-on effects to demand for metals and minerals if growth is more robust in 2024. The breaks aren’t yet being applied to the Santa rally, as investors eye up interest rate cuts as early as March in the US. However, the full effect of painful borrowing costs has yet to be felt, and given the other challenges facing nations next year, from climate change and debt management, pessimism still risks creeping back in.
Oil prices steady but set to stay elevated.
With concerns about attacks in the red sea dissipating following the formation of a US-led maritime patrol force, and big shippers like Maersk returning, the oil price has steadied with Brent Crude hovering above $81. However, prices are set to stay elevated given that military operations in Gaza are expected to continue, and there are still worries about further escalation. Fresh signs that inflationary heat is cooling in the US have also helped bolster prices, raising expectations that the US economy will emerge from a painful period of high interest rates without too much damage.
Boxing day bargain hunters show tough retail climate.
It’s been a lacklustre start for some of the big retail names in early trade amid signs that shoppers are increasingly price sensitive when it comes to scouring the shops. Next was trading down by 0.3% while Marks and Spencer and Frasers group shares were flat. Although footfall was up on Boxing Day compared to last year as consumers hunted for bargains, total spend is still expected to be down on last year, as households tighten their belts. Black Friday promotions have also stolen a march on the traditional in-store Boxing Day sales, with many more people hoping to grab a discount from the comfort of the sofa. With the broader retail sales data showing a decline in the three months to November, it’s likely that stores will have more stock to shift, so those who are ready to splash the cash are more likely to bag a bargain.
