MARKET REPORT: Goldman Sachs predicts the Footsie will rise 14% by end of next year as economies rebuild from Covid
After months of turbulence, things are finally looking up for the stock market.
Pfizer’s vaccine announcement on Monday ignited shares across the world as traders enjoyed the much-needed good news.
The vaccine gave the FTSE 100 a leg-up too – it has risen 8 per cent since Friday – but the longer-term outlook is just as rosy, according to the spreadsheet-savvy analysts at Goldman Sachs.
Breakthrough: Pfizer’s vaccine announcement on Monday ignited shares across the world as traders enjoyed the much-needed good news
The investment bank expects the Footsie to rise 14 per cent by the end of 2021 as economies rebuild from Covid shocks and commodities begin to build up steam.
Analysts estimate it will barrel back through the 7200-mark late next year, a number it crashed through during March’s turmoil.
Goldman’s upbeat forecast will be a relief to those who have watched with unease as the Footsie has recovered far more slowly than other stock markets, most starkly demonstrated by a rally on Wall Street.
Stock Watch – Equals Group
Equals Group rose after bosses snapped up 119,000 shares in the international payments company.
Chief executive Ian Strafford-Taylor picked up 50,000 for £14,900, finance boss Richard Cooper bought 35,000 and chairman Alan Hughes 34,000.
The trio spent more than £35,000 in total, a day after it sealed a deal with cross-border payments firm Homesend to provide services to big companies, banks and financial institutions.
The stock rose 5.3 per cent, or 1.5p, to 30p.
The bank was similarly bullish about oil prices, which it believes could hit $60 this year and $65 in 2022. London’s premier index rose 1.4 per cent, or 85.25 points, to 6382.1, while the FTSE 250 climbed 1.6 per cent, or 311.85 points, to 19,340.19.
And Brent crude nudged 3.2 per cent higher to $44.41 a barrel, a more than 130 per cent rally from $19 in April.
London’s oil majors made a modest advance. Royal Dutch Shell rose 0.7 per cent, or 8.4p, to 1138.2p last night, while BP climbed 0.6 per cent, or 1.35p, to 243.05p.
But the shine wore off on some of the travel and leisure stocks that have been buoyed by the vaccine rally.
Holiday Inn-owner Intercontinental Hotels Group was down 2.7 per cent, or 123p, to 4504p, while plane engine maker Rolls-Royce, one of the biggest gainers, tumbled to the bottom of the Footsie leaderboard, falling 8 per cent, or 8.58p, to 98.42p. It is still around 40 per cent higher than its close on Friday.
Broker notes prompted several chunky moves, including a 3 per cent rise in Astrazeneca shares.
HSBC analysts upgraded the biggest company on the Footsie to ‘hold’ from ‘sell’, sending shares 255p higher to 8785p. It is working on a vaccine with the University of Oxford – but HSBC said the strength of its oncology work had played a key part.
Flutter was another winner after it raised its profit guidance, rising 5 per cent, or 640p, to 13,430p. The Paddy Power Betfair’s customer numbers rose in the third quarter, but it said a marketing drive would notch up a bigger loss in its US arm. Revenue surged by 27 per cent to £1.3billion in the quarter.
But conference and trade show organiser Informa wasn’t so lucky.It said it was seeing ‘continued strength’ in subscriptions to its digital events and has been boosted by the return to in-person exhibitions in parts of Asia.
And it has predicted it will be generating cash next year because of aggressive cost savings, even if it can’t hold in-person events outside China. Shares fell 3.1 per cent, or 17.8p, to 553p.
Elsewhere, engineering and consultancy group Ricardo announced it would raise more than £29million through a share sale to help tide it over during Covid.
It is bracing for a ‘prolonged’ recovery in the car market, which was severely disrupted by lockdowns. Shares closed 9.2 per cent lower, down 34p, at 335p.
And the good news just kept on coming for video game developers – some of the big pandemic winners – as Team 17 launched the first of its games for the snazziest new consoles.
Shares climbed 4.2 per cent, or 29p, to 716p after it said it had rolled out Overcooked! All You Can Eat on Microsoft’s Xbox Series X and will launch it on Sony’s Playstation 5 today.