Santa Claus rally begins

December 28, 2016

The FTSE 100 is higher by a little more than 20 points at the time of writing as the so-called Santa Claus rally appears to have begun. Observers of the markets have for many years noticed a strong propensity for stocks to rise in the period between Christmas and the New Year and this phenomenon appears to be playing out once more. The pound is trading lower against all its major pairs, with the weakness in sterling also contributing to the rise in the stock market.

Miners lead the charge

The best performing stocks on the leading UK stock benchmark come from the mining sector with BHP Billiton the biggest gainer and higher by more than 4% on the day. The first trading session for the market since the Christmas break has been a good one for the mining sector with Anglo American, Rio Tinto and Glencore all currently sitting on impressive gains. At the other end of the index, airlines are seeing some selling pressure with British Airways owner International Consolidated Airlines and easyJet lower by approximately 2.3% and 1.5% respectively.

More challenges ahead for housebuilders?

It’s been a challenging year for housebuilding stocks, with Barratt Developments and Taylor Wimpey seeing a sharp sell-off following the Brexit vote in June. Despite a modest recovery since, shares in both these firms are lower today, with a gloomy outlook for the housing market in 2017 from Halifax doing little to provide any festive cheer for investors. Halifax, the UK’s biggest mortgage lender, released their latest overview this morning and predicted that the housing market would slow next year. They forecast that UK house prices will continue to rise in 2017 but at a reduced pace of between 1% and 4% compared to an of average of 10% recorded in March this year. The main reason cited for this slowdown is the higher than normal degree of uncertainty surrounding the economy as the terms upon which the UK will leave the EU continues to be shrouded in a veil of mystery. Additionally the early part of this year saw a surge in demand for houses as buyers looked to take advantage of a favourable stamp duty rate before the levy was raised, which likely contributed to a faster rate of price growth.

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