Following a shortened final day of trading, the FTSE 100 ended 2017 at a new record high of 7687pts today, having earlier hit 7697pts; the index of blue-chip shares was buoyed by another strong performance from the mining sector.

 

The FTSE 100 posted an increase of 3.9% in December alone and is 7.6% up on the year; the mid-cap FTSE 250, considered by many to be a bellwether of the health of the UK economy because it comprises mainly UK-focused companies, closed up 0.4% at an all-time high of 20,726.26pts –  14.6% up on the year.

News that the UK had agreed the first phase of a Brexit deal has been well received by markets that had feared the prospect of us crashing out without a deal.

Whilst the FTSE 100 has hit record highs, it has performed far less well than the US, where the main stock market indices have all risen by more than 20% this year, and indeed many other stock markets around the world.

US markets were bolstered President Trump’s sweeping tax reform which will see the US corporate tax rate fall from 35% to 21% in 2018; the S&P 500 is set to end the year in the unique situation of having posted gains in each of the twelve calendar months.

‘house builder Persimmon (+63.4%) was the biggest riser in the year, boosted by Government-backed schemes to tackle the UK’s housing crisis’

Gold prices were strong, topping $1300 an ounce and gold miners Fresnillo (+2.8%) and Randgold (+2%) were among the biggest risers; recent debutant Just Eat added a tasty 2.8% on the expectation of higher sales in 2018.

There were also some juicy morsels to be had by successful stock pickers in 2017 – house builder  Persimmon (+63.4%) was the biggest riser in the year, boosted by Government-backed schemes to tackle the UK’s housing crisis such as Help to Buy.

Having fallen out of the FTSE on fears that Brexit could damage the high-end housing market, Berkeley Group rejoined the top tier in September and saw its share price build by more than 50%.

Payments company Worldpay Group (+58.8%) was the second biggest riser having agreed a £9.3bn tie-up with US rival Vantiv, and EasyJet’s shares took off in a major way (+54.2%) after the carrier secured a £35.3m deal to acquire part of Air Berlin, and also moved into long-haul with a service allowing passengers to book connecting flights to the US, South America and Asia on its website.

Commodity prices have boosted mining stocks, with Antofagasta, Glencore and Fresnillo enjoying a conspicuously strong year; the index has also been boosted by giants such as Shell and BP which have benefitted from a rise in oil prices – Brent crude fell as low as $45 per barrel in June but now tops $66.34.

‘All the dangers that were anticipated with a Trump administration haven’t materialised’

However, those getting it wrong and backing troubled doorstep lender Provident Financial for the duration would now be looking at losses 71.3% after a second profit warning in three months; a similar announcement in November saw Centrica (-41%) experience its sharpest share price plunge in 20 years following Mrs May’s threat to cap energy prices.

Others at the other end of the league table included Babcock International (-25.6%) following fears of cuts to UK defence spending and Brexit.

European stocks also recorded their strongest year of gains since 2013, driven by the technology and resource sectors; in Germany the DAX index has risen 28.2% since the beginning of the year, and the Italian blue-chip MIB 30%.

Stephen Eckett, author of the Stock Market Almanac, told the BBC: ‘All the dangers that were anticipated with a Trump administration haven’t materialised.’

‘It has been a little bit of a surprise to many people that markets were as strong as they were this year.’

If we have seen the end of the beginning in the UK’s negotiations to exit the EU, markets remain apparently sanguine and evidently content that sustainable earnings growth will continue to support markets around the world.

There will undoubtedly be bumps in the road, but at the moment there is apparently little temptation for anyone but the most pessimistic in the Project Fear camp to proclaim ‘bubble!’

 

 





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