Yesterday's Trading: FTSE's flyer on rate cut hopes
For those dealers who bothered to return to work after the festive break, an inflation-busting 6% rise in rail fares had given them the hump before they reached the office. But the collective mood of the City improved when they saw the Footsie get 2009 off to a flying start despite a raft of weak data suggesting that the UK economic downturn is gathering pace.
Good news: The FTSE got 2009 off to a good start for those who came into the City today
No doubt they are confident that the latest dire stats effectively rubber stamp a further cut to official interest rates of at least half a percentage point to 1.5% next Thursday. The blue-chip index advanced 105.62 points, while the FTSE 250 soared 266.32 points to 6,627.17.
Even the Americans were in festive mood as the Dow Jones climbed 158 points in early trading, led higher by rescued car giant General Motors and Citigroup, which rose 3% following the decision by bosses to waive 2008 bonuses and reduce pay and severance packages for executives.
Harking back to the horrors of 2008 for a moment, it comes as no surprise to hear that the year closed with private investors owning the smallest equity portfolios on record.
According to data from Capita Registrars, the UK's largest administrator of company share registers, they held £118bn, just 9.6% of the UK market.
The figures were worse in 1981, when Britain was in the grip of a deep recession, in 1979, when the infamous winter of discontent took its toll, and in 1974, when the Conservative three-day week was followed by a Labour government trying to spend its way out of economic disaster. But it sounds all too familiar.
The peak for private investors was in 1968 when the value of their shares in today's prices was £473bn and their share of the stock market was a massive 49%.
Whether or not private investors return in their numbers this year remains to be seen as many must surely have been put off for life by the unbelievable share price gyrations of last year.
But Capita's director Michael Kempe is optimistic. He says: 'Never in modern times has share ownership been less fashionable. However, we are seeing signs private investors are dipping their toes into the market again before the economic news hits rock bottom.'
Commodity prices slumped last year as the global financial crisis slashed demand. Mining stocks suffered as a result but they bounced back strongly yesterday as prices of nickel, tin and copper all advanced on technical considerations ahead of the annual rebasing of commodity indices.
Xstrata advanced 107½p to 747½p, Vedanta Resources 82p to 693½p, Antofagasta 46p to 471½p and Kazakhmys 24p to 255p. Rio Tinto, which scaled an amazing peak of £74 last year in the early days of BHP Billiton's (111p up at 1405p) hostile and eventually unsuccessful bid, gained 204p to 1694p.
The new rail fare increases left First Group, which operates First Great Western and First Capital Connect services, 14p lower at 420p and Stagecoach 2¾p off at 137½p. Buyers pumped up the volume at engineers Weir, 51¼p better at 361¼p, and Morgan Crucible, 10¼p higher at 121¾p.
Supported up to 133¼p on hopes it could have been one of the few winners this Christmas, Game Group closed only ¼p dearer at 127¼p. The retailer of personal computer and video games reported a 27.4% jump in group sales for the 44 weeks to end November.
Analysts believe it possibly gained market share following the collapse of Woolworths. All will be revealed on January 13 when it releases its festive trading statement.
More than 3m GCM Resources shares were traded as speculators chased them 53¼p higher to 79½p. GCM is developing the coal basin in Phubari in north-west Bangladesh into an open pit coal mine and hopes are now high that the newly-elected government in Bangladesh will soon approve the project.
A pint of Greene King IPA and a plate of fish of chips for under £4. Sounds too good to be true, but pub chain JD Wetherspoon is slashing prices to get punters through their doors during a deepening recession. News of the offer, which will run 'indefinitely', helped the shares froth up 14¾p to 325¾p.
Hopes that the oil explorer will finally strike it rich in Iraq this year helped old speculative favourite Petrel Resources gush 6p to 51½p. Mining minnow Mwana Africa added 1.23p to
4.6p on speculative buying.
Netplay TV, the interactive gaming company, rose 1¼p to 24¾p on acquisition news.
•The stay-at-home economy is thriving and Domino's Pizza, the home delivery chain, is not complaining. Its shares sizzled 10¾p higher to 177¼p ahead of Wednesday's festive trading statement. Broker KBC Peel Hunt says it is in a class of its own and expects fourth-quarter sales to grow by around 6% on an underlying basis. Its target price for the shares is 225p.
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