The leading US equity markets hit fresh record highs on Monday, suggesting a ‘Santa rally' is well underway in the run up to Christmas.
The Dow passed the 16,000 mark for the first time ever, while the S&P 500 recorded a fresh high above 1,800.
Year to date, the Dow is up 22% and the S&P is up 26%, showing growing investor confidence following a strong results season and a continuation of QE.
Janet Yellen, who is soon expected to take over as the head of the US central bank, mounted a defence of quantitative easing in her first address to Congress last week, giving investors hope that loose monetary policy will remain in place to support equity markets for some time to come.
In the UK, the FTSE 100 ended the day up 0.45% at 6,723, with asset manager Aberdeen leading the market, up almost 15% following its £650m acquisition of SWIP.
London’s main equity market is up 14% so far this year, underperforming other European markets including the Dax, up 20%, and the French CAC, up 18%.
According to research from Accendo Markets, the FTSE has risen in 18 of the last 20 Decembers, with gains ranging from 0.3% to 7.9%, and on seven occasions the market rose more than 3%.
Aberdeen is historically one of the best performing pre-Christmas stocks - its average December gain is 7.7%, and it rose in 14 out of the last 20 Decembers.
Building materials producer CRH rose 17 times out of 20, with an average gain of 6.7%, and advertising group WPP climbed 15 times for an average 4.9% return. Builders merchants Wolseley and Travis Perkins rose an average 6.2% and 5.6% respectively, according to Accendo.
Heavyweight investor favourite Barclays gained in 9 Decembers, but posted an average fall of 0.7%, while Lloyds Banking Group rose 12 times with an average 1% return, and bailout peer Royal Bank of Scotland climbed 12 times for an average 1.2%.
Mike van Dulken, head of research at Accendo Markets, said: "With the old adage suggesting equities tend to have a good run to year-end, increased talk of and belief in it means positioning is taking place earlier and earlier.
“While we do not necessarily believe shares always rally in December (by that I mean register respectable gains), fuelled by thinning volumes and the annual window-dressing charade of portfolio managers, what we do observe is that certain stocks have a remarkable hit rate for December, potentially offering short-term traders with some profitable opportunities over the festive season.”
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