Shares fall on New Year’s Eve but end 2021 with massive gains

31st December 2021 13:51

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It wasn’t the way anyone wanted to finish the year, but investors can still celebrate significant stock market returns in a nail-biting 2021.

UK stocks closed with small losses on the final day of 2021, but that takes nothing away from what has been a spectacular December and a very good year for investors.

The FTSE 100 ended a shortened trading session down 18 points at 7,384.54, dragged lower by losses at Kingfisher (LSE:KGF), Electrocomponents (LSE:ECM) and National Grid (LSE:NG.) among others.

With trading volumes predictably low, those who were determined to participate had plenty to think about, mainly the Covid situation both here and abroad. While South Africa believes the Omicron variant may have peaked there, worries persist here that New Year celebrations will trigger another surge in transmissions, potentially leading to a spike in hospitalisations.

The more domestically focused FTSE 250 fell by 0.25%, the same as the blue-chip index, to 23,480.81, amid profit taking at the year’s star performer Watches of Switzerland (LSE:WOSG). However, shares in the posh watches retailer still ended 2021 with a gain of 145%. Travis Perkins (LSE:TPK), Carnival (LSE:CCL) and PageGroup (LSE:PAGE) also ended the year on a sour note.

But December 2021 remains a fantastic month for stock market returns. The FTSE 100 added 4.6%, the FTSE All-Share rose 4.5% and the FTSE 250 added 4.3%. Small-caps lagged their bigger cousins, but the AIM All-Share still improved by 2.3%.

As New Year celebrations begin in some parts of the world, we can see just how strong 2021 was for UK stocks. The FTSE 100 ended the year with a 14.3% gain, the FTSE 250 14.6%, the All-Share 14.5%, and AIM 5%.

Leading the main index in 2021 was equipment rentals giant Ashtead (LSE:AHT), up almost 73%, followed by miner Glencore (LSE:GLEN) which added an impressive 61%. Familiar names also featured among the year’s best blue-chips, including Royal Mail (LSE:RMG) up 50% and Diageo (LSE:DGE) 40% higher. Banks also returned to favour, with NatWest (LSE:NWG) up over 34%, Lloyds Banking Group (LSE:LLOY) adding 31% and Barclays (LSE:BARC) 27%.

While it’s great to see the FTSE 100 finally recapture levels last seen before the pandemic struck, hitting a 22-month high this week, the UK market still underperformed international peers this year.

Paris soared 28.9% over the 12 months, while the American S&P 500 was up 27.2% and the Nasdaq Composite 22.1% as the close of business on 30 December. These stunning returns fully demonstrate the benefits of having a diversified investment portfolio exposed to different regions, sectors and asset classes.

This is the final article of 2021.

From everyone in the editorial team at interactive investor, we wish all our readers a happy, healthy and prosperous 2022!

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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