November's optimism has spilled over into December in what is traditionally a strong period for stocks.
A raft of positive news has led to further investor optimism and a strong start to December.
In the US, talks of a much anticipated fiscal stimulus package appear to be back on the table at a time when the economy is still stuttering under the effects of the pandemic. Hopes for a further injection aimed at accelerating the recovery tempted back the bulls. M&A activity also provided a further boost as a $28 billion deal between Salesforce.com (NYSE:CRM) and Slack Technologies (NYSE:WORK) followed hot on the heels of the $44 billion S&P Global/IHS Markit acquisition announced the previous day.
More broadly, there was also progress on the Covid-19 vaccine, with both Pfizer (NYSE:PFE) and its German partner BioNTech (NASDAQ:BNTX) as well as Moderna (NASDAQ:MRNA) confirming that emergency approval had been sought in Europe. Indeed, this has now been granted for the Pfizer/BioNTech vaccine in the UK, with a targeted roll out potentially beginning as early as next week.
These combined fillips to sentiment drove both the S&P 500 and the Nasdaq to record closing highs, with the indices now having risen by 13.3% and 37.6% respectively in the year to date, and with the Dow Jones not far behind, and ahead by 4.5% in 2020.
In addition to the vaccine developments, the FTSE 100 was also buoyed by some comforting factory activity and confidence data, even though it appears that Brexit negotiations are going to the wire.
The FTSE remains down by 15.3% in the year to date, but the positive November momentum which spilled over to the first trading day of December is a possible sign of a turn in the tide of sentiment towards the UK’s flagship index.
Tesco (LSE:TSCO) provided a somewhat surprising announcement that it would be returning the £585 million of business rates relief which it has received to date, despite incurring estimated Covid-19 related costs of £725 million thus far. This action may also throw down the gauntlet to some of its blue chip rivals, resulting in some other companies potentially following suit.
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