Monday, 18th December: To start off this week’s merry festivities, the FTSE opened around 0.30% higher at 7513 following the news of tax reforms in the US during early hours. The proposed reduction in the main rate of the US federal corporate tax from 35% to 21% is expected to boost corporate earnings by an average of circa 10%, and to highs of 30% for some, which looked more promising than ever as the Republicans in Congress managed to overcome some hurdles surrounding the bill. The news also failed to reverse the gains sterling had made recently against the dollar, as GBP/USD was 0.19% higher at $1.3345.
When looking back at the progress the FTSE 100 has made this year, all looks quite well. In the year to date, the index has grown around 7%, but this is fairly miniscule compared to other indexes. For example, the DAX is up around 16%, the CAC 40 is up 12%, the Nikkei 225 is up 18%, the Hang Seng 33% and the Dow Jones Industrial Average 24%, all year to date. Many will agree that the main, but not sole, purpose for the FTSE’s inability to keep up with the pace of other global indexes is the political turmoil surrounding its home town, yes we’re talking about that Brexit guy again, and he looks like he’s in it for the long haul.
The third Friday of December is when any FTSE 100 constituent changes are implemented, which become effective on the following Monday (today), and so it is the first day on the index for Just East, DS Smith and Halma. The trio haven’t done too badly on their first day as fellow blue chippers either, as by the end of the day they were all up circa 0.39%, 1.69% and 1.36% respectively.
The index managed to hold onto its gains throughout the day, with help from the likes of Old Mutual, the financial services group which was trading marginally higher at the open and over 5.0% higher near the close. EasyJet closed at the bottom end of the index, down 2.82% %, after confirming the acquisition of Air Berlin assets. At the end of the day, the FTSE 100 and 250 were both up 0.62% and 1.03% respectively.