Interactive Investor

Market snapshot: are UK stocks really back into fashion?

11th January 2021 08:15

Richard Hunter from interactive investor

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So long overlooked by international investors, the UK indices are the best performers in 2021 so far.

Markets are driven by tomorrow, not today, and for the moment vaccine optimism prevails.

The FTSE 100 index has so far been the star of the show in 2021, rising 6.4% in the first week of 2021 trading.

The pop in the oil price following the announcement from Saudi Arabia of a production cut, helped propel the oil majors, with rises of 17% and 13% for BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) respectively. In addition, there has been some interest around the banks, with the possibility of some inflation this year alongside a boost in lending giving support to the beleaguered sector.

This has resulted in a strong early showing from the UK’s premier index in 2021, raising hopes that the FTSE may be inching back into fashion with international investors after a period of prolonged indifference.

Asian markets have also made a good start to the year, with the read across to other economies showing how recovery may look post-pandemic.

In the US, a much weaker than expected and negative non-farm payrolls reading on Friday did nothing to dampen sentiment. In fact, along with comments from President-Elect Biden, it fuelled hopes for further significant stimulus to turbocharge a US economic recovery which is clearly stalling.

As such, the main American indices all hit record closing highs, and in the first week of trading the Dow Jones had already added 1.6%, the S&P 500 1.8% and the Nasdaq 2.4%.

Further colour will be added to the state of the US economy when the fourth-quarter earnings season kicks off on Friday, with the likes of JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) providing updates which will also have some implications for the UK banking sector.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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