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FTSE 100 nears pandemic high as investors bet on rebound in global economy

Graeme Evans
·2-min read
A woman wearing a face mask walks past a stock exchange board (AFP via Getty Images)
A woman wearing a face mask walks past a stock exchange board (AFP via Getty Images)

Investors betting on a rebound for the global economy in 2021 continued to hold the upper hand today as the FTSE 100 index remained at near to a five-month high.

Sentiment was further boosted overnight by the Dow Jones Industrial Average breaking through the 30,000 barrier for the first time.

A trio of positive vaccine announcements and Joe Biden's transition to the White House have given a significant lift to market optimism.

Analysts at investment bank UBS yesterday tipped the FTSE 100 index to finish next year at 7,200, as long as there's a Brexit deal to encourage international investors back into shopping for undervalued UK assets.

Today, the FTSE 100 index was 13.9 points lower at 6418.98 as the top flight largely held on to the gains seen in Tuesday's surge of more than 1.5% to the highest level since June.

Improved demand prospects pushed the price of Brent crude ever closer to 50 US dollars a barrel, having been trading at below $20 US dollars at the start of the pandemic crisis.

Shares in heavyweights BP and Royal Dutch Shell have been major beneficiaries of the rebound, although the pair eased 1.65p to 273.15p and 3.2p to 1,323p respectively during today's more subdued session.

Engineering group Melrose Industries has been another popular recovery trade for investors during November, with the GKN owner up another 8.05p to 171.15p after reporting that it is trading at the top end of expectations for 2020.

Its aerospace division has still to see a recovery in trading conditions, with sales down 37% in the four months to October 31, but trends are much more encouraging in automotive and powder metallurgy.

The second tier FTSE 250 index fell 144.66 points to 19,644.90, although flow control and instrumentation business Rotork impressed after it said 2020 profits were likely to be in line or slightly ahead of current market forecasts.

Shares initially surged 4% but were later a penny lower at 317.2p, still significantly higher than the 191p seen in March.

On the AIM junior market, investors gave Kistos a warm reception on its first day of trading. The investment company, which is a green energy play that aims to cash in on the shift to a lower carbon future via hydrogen storage and other environmentally friendly power, improved by 5p to 105p after raising £31.75 million through the share placing.