The FTSE 100 surged 3.1%, before paring back from highs to close 1.7% up, as it started its first trading session of 2021 buoyed by vaccine roll-out news and an oil price jump that lifted miners.
The main index leaped 200 points before subsiding to a 111 point gain to 6,571.88 as investors shrugged off concerns the UK could be forced into another full lockdown to contain the spread of a mutant Covid-19 strain. Instead it focused on the plan to roll out the coronavirus vaccine developed by AstraZeneca (AZN) and the University of Oxford.
The UK’s separation from the EU, which was completed on New Year’s Eve, also grabbed investor attention, who reacted positively in the first trading day of the year.
‘The finer implications of the UK’s exit remain to be seen, but the fact that a deal was agreed prior to the deadline removes some of the overhang which ad been haunting the index for some time,’ said Richard Hunter, head of markets at Interactive Investor.
Connor Campbell, analyst at Spreadex, said the FTSE was ‘determined to make the New Year better than the last’.
‘Despite the rapid increase in daily Covid-19 case numbers and the impending need for a new national lockdown – be it immediately as urged by Keir Starmer, or in a couple of weeks, as suggested by Boris Johnson – the FTSE was the most bombastic of the major indices after the bell,’ he said.
Campbell added that today’s gains will partly be ‘overcompensation’ as Covid-19 kept optimism over the Christmas Eve Brexit trade deal in check.
The biggest blue chip winner was betting group Entain (ENT), formerly known as GVC, which received an £8bn bid from MGM Resorts International. Shares soared 26.4%, or 299p, to £14.33, but Entain said the proposal ‘significantly undervalues the company and its prospects’.
Hargreaves Lansdown analyst Nicholas Hyett said Entain shareholders ‘shouldn’t take this deal for granted’ as ‘MGM’s first offer may have undervalued the group, but a future bid is far from guaranteed’.
Miners pushed their way up the index this morning as the oil price rose ahead of an Opec meeting, the first of a new monthly meeting between the cartel’s members and allies, led by Russia, to discuss production curbs.
Metals miners were also boosted by gold pushing higher, with Fresnillo (FRES) advancing 6.9% to £12.08 and Polymetal International (POLY) climbing 5.6% to £17.79.
Other miners pushing higher included:
- Anglo American (AAL) up 4.5% at £25.34
- Glencore (GLEN) up 4.3% at 243p
- BHP Group (BHP) up 4% at £20.03
- Rio Tinto (RIO) up 3.8% at £56.83
The FTSE 250 enjoyed an upswing, although did not quite manage to match the heights of its large cap cousin, gaining 1.2%, or 266 points, to trade at 20,754.
Travel operator Tui (TUI) jumped to the top of the mid-caps, gaining 6.7%, or 30p, to trade at 489p, benefiting from a vaccine roll-out that will hopefully put the travel industry back on a firmer footing.
In investment trust news, song royalty trust Hipgnosis (SONG) ticked down 0.4%, or 0.5p, to 123p after acquiring the entire back catalogues of Interscope Records founder and producer Jimmy Iovine, who worked with John Lennon, Patti Smith, and Bruce Springsteen.
Foresight Solar (FSFL) edged 0.4%, or 0.5p, higher to trade at 103p after acquiring a Spanish solar portfolio and SDCL Energy Efficiency Income (SEEIT) traded up 0.7%, or 0.8p, at 107p after buying an additional 15% stake in Primary Energy, a portfolio of recycled energy projects in the US.
