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FTSE 100 makes biggest annual gains in five years, but lags behind other markets

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  • ^FTSE

London’s markets waved goodbye to 2021 with a whimper on Friday as it looked back on the best year in the past half-decade.

Gambling companies, including Flutter Entertainment and Entain, joined some of the country’s biggest energy firms in the red.

Markets closed at 12.30pm on Friday instead of the usual 5pm, and by that time the FTSE 100, the index which monitors some of London’s biggest companies, had dropped 0.3%, or 18.47 points, to 7,384.54.

“It is a quiet session across markets today as the final session of the year draws to a close in London,” IG chief market analyst Chris Beauchamp said.

“After playing catch-up with US markets earlier in the week, the FTSE 100 has edged lower in recent sessions.”

It marks the end of the strong 12 months for the FTSE, which has gained close to 1,000 points since the start of the year.

The index started 2021 on around 6,460 points and continued to gain steadily, despite some dips.

Not least among these was the drop in early December after the Omicron variant of Covid-19 was discovered.

But by the end of the year the FTSE’s performance looks poor compared to some of its international peers.

Since January, the FTSE has gained around 14%. This compares to 27% for New York’s S&P 500 and a 29% rise on the Cac 40 in Paris.

Even the lesser-performing Frankfurt Dax, which rose only 16%, and the US Dow Jones Industrial Average, up 19%, were ahead of the FTSE 100.

The S&P passed its pre-pandemic level in August 2020, the Dow surpassed its level in November 2020, while the Dax did so around the turn of last year and the Cac had finally erased its Covid losses by April.

But the FTSE is only just now hovering around the mark it recorded before the pandemic.

Mr Beauchamp said: “As we look ahead into 2022, the questions around inflation, growth and the return of the pandemic remain with us, while the monetary policy outlook is clouded by the potential for more rate hikes throughout the coming months.

“Overall it still seems sensible to expect further gains for stocks, but with perhaps less of the exuberance we saw in 2021.”

On currency markets sterling recorded a 0.1% drop against the European and US currencies. By the time stock markets closed one pound could buy 1.3481 dollars or 1.1898 euros.

Few companies chose New Year’s Eve to announce news but Round Hill Music did reveal that it has bought a catalogue of hits from the producers behind Rage Against The Machine’s Killing In The Name song.

The producers’ royalties for the 1993 number one is one of 308 recordings that are part of the deal.

The biggest risers on the FTSE 100 were Melrose Industries, up 3.65p to 159.9p, Fresnillo, up 15p to 892.8p, Rentokil, up 7.8p to 584p, Pearson, up 7.8p to 613.2p, and BT, up 1.55p to 336.6p.

The biggest fallers on the FTSE 100 were Kingfisher, down 11p to 338.3p, United Utilities, down 28p to 1,206p, National Grid, down 19p to 1,059.8p, Bunzl, down 52p to 2,885p, and Royal Mail, down 9p to 506p.

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