The Markets


Happy New Year!

Traders are toasting the strongest year for the FTSE 100 since 2009 following a bumper crop of new entrants to the stock market.

Amid renewed confidence in the economy, markets across Europe clocked up their strongest gains in several years while Wall Street was on track for its best performance since 1997.

In the UK, 2013 was the best year for initial public offerings since before the crisis, with Royal Mail the most notable – and controversial – addition to the London Stock Exchange.

Tuesday’s half day of trading before the New Year break ended with just modest gains on the day of 0.3% but the FTSE 100 was up 14.4% for the year.

That is a far cry from 2008 when the index suffered the worst year in its 30-year history with losses of 31.3% against the backdrop of the global financial crisis.

Still, it was by no means an easy ride for those betting on stocks in 2013. The FTSE 100 began the year strongly, before a springtime wobble wiped out its gains.

Most of the second half of 2013 was dominated by speculation about when the US Federal Reserve would begin to slow the bond-buying programme that has been pumping $85bn (£51.3bn) a month into the world’s biggest economy.

That decision finally came in December, but the so-called “tapering” from the Fed was modest and sparked a late rally.

Closing the year at 6749.09, the index of London-listed blue chips was 200 points short of regaining its all-time high, reached exactly 14 years ago at the end of December 1999. Analysts said it could well soar past that record level early in 2014.

Alpari analyst Craig Erlam commented: “I think we’ll see new record highs being made in the FTSE this quarter, with the index hovering around 7,000 at the end of March.”

Just 16 stocks on the FTSE 100 lost ground over the year and they were mainly from the  mining sector, reflecting a tough year for commodities amid worries about demand from big consumers such as China.

As signs grow that the global recovery is gathering steam, investors have been turning their attention to riskier assets while the old safe-haven favourite, gold, had a torrid year. The precious metal broke a 12-year run of consecutive gains ending 2013 as the worst year for 32 years.

Shares were the standout performers in 2013 and the UK’s wider midcap market – seen as a more reliable indicator of the economy – ended the year on a high note. The FTSE 250 closed at an end of day all-time high of 15,935.35, having gained 28.8% over the course of the year.

Pan-European indices posted their best annual gains since 2009. France’s CAC-40 equity index rose 18% over the year while Spain’s IBEX grew more than 20%. Germany’s DAX index, which closed a day earlier for the holidays, gained an even bigger 26% over the year.

But it was Ireland’s index that did best in Europe, with a 33.8% gain, as the country emerged from its financial bailout programme.

Source; The Daily Telegraph