Footsie claws back Covid losses: Blue chip index hits 22-month high

Footsie finally claws back its Covid losses: Britain’s blue chip stocks hit 22-month high as fears over the Omicron variant ease

The FTSE 100 has finally returned to where it stood early last year before crashing as Covid-19 triggered panic selling on stock markets worldwide.

On the first day of trading in London since the Christmas break, the blue chip index rose as high as 7457 before closing up 48.59 points at 7420.69.

That was the highest level since February last year and means the Footsie has recovered all its pandemic losses some 22 months after the rout began.

Recovery: On the first day of trading in London since the Christmas break, the blue chip index rose as high as 7457 before closing up 48.59 points at 7420.69

Recovery: On the first day of trading in London since the Christmas break, the blue chip index rose as high as 7457 before closing up 48.59 points at 7420.69

In one of the most brutal sell-offs of all time, the benchmark lost a third of its value in just four weeks, crashing below the 5000 mark. But it has gained 49 per cent since and is up 15 per cent so far this year.

The latest rally came as fears over the Omicron variant eased and investors welcomed Boris Johnson’s decision not to impose restrictions before New Year’s Eve. 

Russ Mould, investment director at stockbroker AJ Bell, said: ‘The FTSE 100 is now providing a mid-teens percentage gain in 2021, with additional cash returns from dividends, special dividends and buybacks on top and I think anyone would have settled for that, had they been offered it a year ago.’

The oil price also rose, with Brent crude topping $80 a barrel for the first time since Omicron emerged. 

Oil has swung wildly on commodity markets since the pandemic began, sinking as lockdowns hammered the global economy before rising on signs of recovery. 

Brent crude – the key London benchmark on the oil markets – fell below $20 a barrel in April last year but was trading at over $86 two months ago.

Jeffrey Halley, market analyst at Oanda, said: ‘Although Omicron cases in the US and continue to surge, it has yet to make its presence felt negatively in economic data. For now, markets are overwhelmingly pricing in the latest variant as a milder incarnation, despite its easier contractibility.

‘Investors continue to tentatively price in a global recovery hitting a minor bump, and not a pothole.’ Despite the rally, the Footsie remains below its all-time high of just over 7900 reached in May 2018.

By contrast, the leading benchmarks in Europe and the US are trading around record levels having surpassed pre-Covid peaks months ago. 

The FTSE 250 – a better barometer of the British economy than the FTSE 100 as its constituents are more domestically focused – also recovered its pandemic losses far earlier.

It rose another 246.84 points to 23,517.27 yesterday, leaving it 8 per cent above where it was pre-Covid but 3 per cent off its September peak.

While US markets were boosted by an abundance of technology stocks that have boomed during the pandemic – such as Apple, Amazon and Microsoft – the FTSE 100 is dominated by miners and banks.

Analysts also warned that concerns over Brexit continued to hold back the UK market.

‘The FTSE 100 has been slower to regain the ground it lost in the initial post-pandemic panic of spring 2020 and it has yet to set any new all-time highs this year, unlike say the US, France, Germany or India,’ said Mould.

‘Some of this may still relate to Brexit, where the debate continues to rage over the long-term pros and cons, which will only become fully apparent much further down the line.’

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