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Markets start the year in positive fashion

Indications were that the first trading day of 2012 was going to be a positive one, not least because of the strong gains experienced on European indices yesterday whilst the UK enjoyed a bank holiday. The game of catch up, combined with strong data from Asia overnight, ensured the FTSE 100 index started the year more than 1% in positive territory. PMI data out of China and India showed expansion in December, something that encouraged investors given the former had showed a minor contraction in the previous month. The news buoyed Asian indices, as well as commodities with oil also posting a 3.7% rise by the end of London trade given the tensions between the US and Iran in the strait of Hormuz, a conduit for around 17 million barrels of oil per day.

UK manufacturing PMI came in higher than the 47.3 that had been forecast, although the reading of 49.6 still showed a contraction and contributed to a quarter that was the worst, by this measure, since the second quarter of 2009. The US Institute of Supply Management (ISM) data showed better than expected positive results, sending US indices soaring to the tune of around 2% at the start of trade.

The UK’s blue chips gained ground to match the US gains, most points being added by miners following the positive Chinese factory data and energy companies that rose with the price of oil. Kazakhmys, the Copper and metals miner ended up a staggering 9.5%, with Antofagasta, Essar Energy, Rio Tinto and BHP Billiton not far behind with their 6% plus gains.

The UK index finished up 127 points, higher by 2.3% to 5699, matching highs not seen since the last rally in late October. Investors will surely welcome the positive start to what is largely anticipated to be another difficult year in financial markets.

This was posted in Bdaily's Members' News section by John Dance .