John Dance

Year ends on a positive for shares

With little in the way of news to provide direction and many an empty trading desk due to the session being just a half day, it was an uninspiring end to the calendar year for UK shares. Not unlike the previous day the initial hours were spent flip flopping between positive and negative territory but gradually markets maintained downward momentum as the morning wore on and the FTSE 100 was lower by 30 points at one point.
However, a fantastic last half hour rally meant the year would still end on a high and the blue-chip index closed at 5572, a 5.5 point gain. So a dramatic year came to an end, the FTSE 100 losing approximately 6% over the 12 months, versus a virtually flat year for the S&P 500 in the US, but falls of between 15 and 18% for the Dax and CAC 40 of Germany and France respectively.
In bond markets the UK continued to show the benefit of having control of your own national fiscal policy. Despite austerity the UK still has a worse annual deficit at present than both Spain and Italy, but as Italian 10 year yields stubbornly remained at 7%, the 10 year UK gilt yield fell to a new all time low of 1.95%.
Gold was able to reverse some of its recent losses, rising 2.5% to $1570, whilst Silver posted a spectacular gain of over 5%. Elsewhere though commodity markets were quiet, little price changes being seen anywhere, including oil as Brent Crude moved ahead by just 0.3%.

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