UK investors seem to have discovered their festive spirits during the run-in to Christmas even with the Omicron variant running wild worldwide. Both the FTSE 100 and mid-cap FTSE 250 have made gains during December, albeit for myriad reasons.
Overseas, the Dow Jones has done well to date this month, the Euronext 100 - Europe’s 100 largest companies - is also in positive territory, if barely, but the same cannot be said for other major markets. Both the S&P 500, the US’s most closely watched index, and the big tech index, the Nasdaq Composite, have struggled to shake-off worries about global growth, inflation and interest rates as the pandemic reasserts itself.
The FTSE All World index is the low side of flat so far in December.
| Major Indices | |
| FTSE 100 | 1.96% |
| FTSE 250 | 0.13% |
| S&P 500 | 0.02% |
| Dow Jones | 1.30% |
| Nasdaq Composite | -3.58% |
| Euronext 100 | 0.27% |
| FTSE All World | -0.12% |
| Source: Sharepad, to 20 Dec 2021 | |
The soggy performance overall in the US might be a little surprising, according to data from Schroders. The investment bank says that 2020 was the second year in succession that US stocks had rallied over the holiday season, following the second worst December on record two years earlier.
‘In December 2018 US stocks returned -9% amid concerns over the health of the global economy - little did we know a catastrophic pandemic would arrive just over a year later.’
But while December 2018 wasn’t very cheery for investors, it was only the seventh time in the last 35 years that the ‘Santa Rally’ failed to materialise, says Schroders. Investor psychology is one theory for this trend, according to Schroders, with positive mood driving optimism and share buying.
Another view is that fund managers, which account for a substantial part of share ownership, re-balance portfolios ahead of the year-end.
| FTSE 350 | |
| Domino's Pizza | 21.3% |
| Moonpig | 13.8% |
| Indivior | 12.1% |
| Auction Technology | 11.8% |
| National Express | 11.4% |
| FirstGroup | 11.0% |
| Ferguson | 10.9% |
| Oxford Instruments | 10.2% |
| Telecom plus | 9.9% |
| TP ICAP | 9.8% |
| Source: Sharepad, to 20 Dec 2021 | |
Whatever is at play, it might not surprise many investors to find that only one FTSE 100 member makes it into the FTSE 350 top 10 performers in December 2021 - plumbing equipment supplier Ferguson (FERG). Soaring profits reported earlier this month have clearly helped bolster investor confidence around the stock.
Ferguson said on the 7 December that it grew operating profit 64% year-on-year to $739 million (about £557 million) off the back of $6.8 billion sales in the quarter to 31 October 2021, the first in its new fiscal year. In the US, it said new residential housing starts and growth in residential repairs and works drove sales.
The performance of the top December UK blue-chips is not terrible by any means, even if they lag their mid-cap cousins.
| FTSE 100 | |
| Ferguson | 10.9% |
| BAT | 9.5% |
| Berkeley | 8.3% |
| Flutter Entertainment | 8.1% |
| DCC | 7.1% |
| National Grid | 6.8% |
| Sage | 6.7% |
| Coca-Cola HBC | 6.5% |
| Kingfisher | 5.4% |
| HSBC | 5.4% |
| Source: Sharepad, to 20 Dec 2021 | |
As for major US stocks, given the raging pandemic, that several major drugmakers feature in the S&P 500’s best December performers probably won’t shock many.
| S&P 500 | |
| Cerner | 28.4% |
| Hormel Foods | 17.1% |
| Broadcom | 16.5% |
| Quest Diagnostics | 15.3% |
| Vertex Pharmaceuticals | 15.3% |
| Centene | 15.2% |
| Bristol-Myers Squibb | 15.1% |
| MarketAxess | 14.4% |
| Pfizer | 13.6% |
| Lamb Weston | 13.6% |
| Source: Sharepad, to 20 Dec 2021 | |
