elief at Boris Johnson’s last-minute Brexit agreement and a weakening of the pound against the dollar were expected to give UK markets a lift as traders returned to their desks from the Christmas break.
UK shares were expected to rally when the London market reopens with global markets further lifted by Donald Trump’s reluctant green light for a $2.3 trillion pandemic spending package.
The FTSE 100 was being called up around 0.5% or 30pts on opening to 6576.8, while the more domestically focused FTSE250 was expected to open up at around 20531, holding on to a 1.23% gain before markets closed on Christmas Eve.
The outlook for an upbeat final week after the 2020 rollercoaster comes on the back of the 1,200-page Brexit agreement, which is expected to be given crucial backing from Tory members of the hardline ERG group this afternoon before going to the Commons for a vote tomorrow morning. EU countries are expected to clear the way for its implementation in a vote in Brussels at 3pm today.
FTSE stocks exposed to the British market, such as housebuilders, were likely to react the most strongly while uncertainties remain over the future of the UK financial services industry and ongoing fears of disruption in response to tighter regulations at ports.
Companies on the blue-chip index operating in foreign currencies will also be given a boost by a slight dip in sterling, which fell against the resurgent dollar from a December peak of $1.3624 to $1.3483.
Edward Moya, market analyst at Oanda, said: “UK stocks will rise sharply as chaotic business disruptions have been avoided. Securing a Brexit trade deal gives many investors the greenlight to bet on the UK economy over the long term.”
The outgoing US president’s reluctant agreement to back a government stimulus package which will see $600 stimulus cheques paid directly to Americans and avert a looming government shutdown saw the S&P 500, Dow Jones and Nasdaq all reach record highs in New York yesterday.
The S&P 500 gained almost 1pc, hitting an intraday all-time high, while the Dax in Germany closed 1.5pc up and the MSCI World Index rose a further 0.7pc to close in on records reached before Christmas.
Oil also rose on expectations of rising fuel demand in the US, with Brent crude futures up 36cents to $51.22 a barrel, while the wave of optimism lifted Asian shares with Japanese stocks hitting a 29-year high.
Five analysts polled by Reuters estimated crude stocks likely fell by 2.1 million barrels in the week to December 25, in advance of a meeting of the OPEC+ group on January 4 where Russie is expected to push for an increase in output.