Thanks to Covid vaccine hopes, the FTSE 100 has enjoyed its best month since 1989, surging by 12.4%.
Optimism for an economic recovery after pharmaceutical companies announced promising coronavirus vaccines, and the start of the rollout, has resulted in the rise of the value of UK company shares by over £180bn.
This is the strongest month for the index since 1989 when the market gained by 14.4% during January.The FTSE 250 also had its best month since the financial crisis of 2009.
Sell Off
There were hopes that the FTSE 100 might break this record; however, gains of £30bn were erased by a burst of selling on towards the end of the month.
It’s been suggested that this was due to financial investors seizing on the opportunity to cash in on the gains of the past month, particularly as the economic forecast is uncertain at best.
The prospect of significant economic damage following lockdown and the Brexit transition period ending means that despite the successful month, a strong sense of caution remains, particularly as the FTSE is still 1,000 points down from the start of 2020.
Global Gains
Other international financial markets have also seen a successful month, with events such as Joe Biden’s election as US President fuelling hopes for an economic rebound and an injection of financial investment.
The US Dow Jones saw, for the first time, an industrial average breaking through 30,000 points, and hopes of a boost to energy demand as the economy recovers and lockdowns end meaning that the price of oil has risen by $10 a barrel, although oil giants Shell and BP fell 2% ahead of an oil alliance meeting.
The positive speculation from the markets could improve as the busy Christmas period comes closer and restrictions ease.
However, the UK is not yet out of the woods, having entered the worst recession in over 300 years, and more economic hurdles to come.
So while the good news of November has given investors a much-needed burst of hope, it is clear that there is still a long way to go.