UK stock rally halts as traders pocket profits

Signage is seen outside the entrance of the London Stock Exchange in London, August 23, 2018. — Reuters pic
Signage is seen outside the entrance of the London Stock Exchange in London, August 23, 2018. — Reuters pic

LONDON, Dec 30 — British shares edged lower on the year’s penultimate trading day, as investors cashed in gains from a recent rally and braced for 2020.

The FTSE 100 fell 0.2 per cent after logging 11 straight days of gains, its best run in three years.

The FTSE 250, which hit successive record highs last week, was marginally lower at the start of another holiday-shortened week, as a stronger pound supported the index and helped it outperform the European benchmark.

Healthcare stocks AstraZeneca and GlaxoSmithKline were the biggest drags on the blue-chip bourse. Oil majors Shell and BP also weighed, despite crude prices touching a three-month high.

“The overall picture is one of book squaring and profit-taking... with investors preferring to wait until next week before loading up on the first trades of a new decade,” OANDA analyst Jeffrey Halley said.

Receding worries around the US-China trade situation, British politics and Brexit have fuelled sharp gains for UK markets in December.

All signs point to Washington and Beijing ratifying a Phase 1 deal early next year. At home, Prime Minister Boris Johnson’s election victory and prospects of a clear Brexit process have spurred risk-on sentiment.

Though Johnson’s hard line on a December 2020 deadline for a free trade agreement with the European Union blemished an otherwise robust rally, the FTSE 100 is still tracking its best month since April 2018 and its biggest annual gain since 2016.

The more domestically focused midcaps are on course for their best month since January and their best yearly performance since 2013.

However, Halley warned against reading too much into the year-end moves that have come in thin trading volumes over the Christmas holidays.

“Strong directional moves at this time of the year should always be taken with a grain of salt with so many participants, either away, or having closed books for the year-end,” Halley said.

Next Plc was the biggest blue-chip loser, shedding 2 per cent. The retailer will be one of the first companies to report on trading over the key Christmas period, with its update scheduled on Friday. — Reuters

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