FTSE 100 leaps 12% in November, what’s expected in December?

  • December 01, 2020 09:21 AM GMT
  • Kunal Sawhney
    CEO Kunal Sawhney
    2212 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

FTSE 100 leaps 12% in November, what’s expected in December?

Stock markets across the world from New York to London to Tokyo have witnessed a raging run in November with their respective stock indices registering sharp gains on the back of a number of issues mainly due to vaccine arrival optimism. Almost all stock indices gathered pace on the positive side following the favourable global cues.

November jubilation

Of all the major markets, Japan’s benchmark index Nikkei 225 emerged as a leader in terms of gains realised in the preceding month sustaining a steady uptick in most of the trading sessions.

Nikkei 225 (1-month performance)

(Source: Refinitiv, Thomson Reuters)

Tokyo Stock Exchange-based Nikkei 225 advanced a little over 15 per cent in November to 26,433.62 from 22,977.13 in October, while the domestic headline index FTSE 100 managed a return of more than 12 per cent in the corresponding stretch. 

FTSE 100 (1-month performance)

(Source: Refinitiv, Thomson Reuters)

 

According to the data available with the London Stock Exchange, the FTSE 100 surged as much as 12.35 per cent in 21-day trading month to 6,266.19 (30 November) from a mark of 5,577.27 as on 30 October. Barring the previous day’s trading, FTSE 100 had clinched a gain of more than 14 per cent on 30 November, the heavyweight shares constituted index ended 101.39 points or 1.59 per cent lower at 6,266.19.

The US markets have also observed a windfall of gains in the erstwhile month with the key stock indices Dow Jones Industrial Average, tech-heavy indicator Nasdaq, and the broader share index S&P 500 advancing more than 10 per cent each. According to the last closing figures, DJIA went up by 11.84 per cent to 29,638.64 from the October level of 26,501.60; Nasdaq soared 11.80 per cent to 12,198.74 from 10,911.59, while S&P 500 added 10.75 per cent to 3,621.63 from the mark of 3,269.96.

S&P 500 (1-month performance)

(Source: Refinitiv, Thomson Reuters)  

Nasdaq Composite (1-month performance)

(Source: Refinitiv, Thomson Reuters) 

DJIA (1-month performance)

(Source: Refinitiv, Thomson Reuters)

What’s in store for December

With the ongoing bonanza and the market-wide cheer amid the investors, the momentum of equities in December is likely to remain volatile because of the developments around the fiscal stimulus, coronavirus vaccine, the trade relationship between the European Union (EU) and the United Kingdom (UK), and the policies announced by the soon-to-be-framed Joe Biden’s administration.

The market direction worldwide will be dependent on the bilateral trade terms between China and the US, arrival of the Covid-19 vaccine, commercial activity in and around the festive season, cumulative effects of the new tier system on the businesses, and the new coronavirus cases in the near future.

Stock markets may see a partial correction on the back of profit booking as most of the headline indices are trading at near their respective six-month highs. A stock index trading at a multi-month high has always been a sign of optimism amid the investors and the market-wide forward-looking stances of the policymakers and experts.

However, a negative news flow around the difficulties in vaccinating the frontline workers across the world, a lower-than-expected efficacy of Covid-19 vaccines, higher than anticipated side effects of the vaccine shot, a non-conclusive Brexit agreement, a dull fiscal stimulus from the Biden administration, and a further spike in Covid-19 cases may overshadow the festive cheer and ongoing market optimism.

 


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