The seasonal goodwill continued in the City yesterday, as the so-called Santa rally kept on rolling. The first session after Christmas Eve's half day saw the FTSE 100 strengthen 35.2 points to 5437.6 and left the index on course for its biggest annual gain since 1997. Yesterday was particularly significant as, for the first time, the index closed higher than the session before the collapse of Lehman Brothers in September 2008.
Simon Denham, the chief executive of Capital Spreads, said: "The 5,400 barrier has definitely gone and initial action on the off this morning saw a spike in the FTSE futures pushing the index up to 5450 as weak shorts were squeezed." Yet he added: "Post this event, there has been precious little to excite us and dealers are – in the main – keeping their powder dry awaiting events."
The miners drove blue chips in the morning as commodity prices rallied. Copper was particularly strong, as threats of strikes in Chile sent prices higher. The benchmark three-month copper contract rose 1.9 per cent to hit $7,273 a tonne on the London Metal Exchange. Antofagasta, a copper miner in Latin America, was the biggest riser, strengthening 37p to 972.5p.
The silver and gold miner Fresnillo slipped into negative territory as its 56 per cent-owned joint venture once more upped its bid for Canplats Resources Corporation. The news of its C$4.80 per share bid from Minera Penmont, which it owns with Newmont Mining Corporation, sent Fresnillo stock down 2p to 791.5p. It looks to have trumped the bid from rival Goldcorp, which has until 5 January to respond.
The blue chips were helped by strength from the US and Asia overnight, where the Dow Jones Industrial Average hit year highs and the Nikkei was at its strongest for four months. In Germany, the DAX rose above 6,000 points for the first time since Lehmans went down.
Liberty International, which owns shopping centres including Cribbs Causeway in Bristol and the MetroCentre in Gateshead, ended the day top of the pile, up 24p to 510.5p, as crowds were piling into stores to pick up a bargain in the sales before the VAT rise comes into force. The sector was strong, bolstered by data released by the Bank of England showing the British had put a net £4.9bn of equity into housing. British Land was the next strongest, rising 14.3p to 462.3p.
Not many blue chips were in negative territory yesterday, and only two dropped more than 1 per cent. Worst in the morning was British Airways. It has been a month to forget for the British flag carrier as it took a union to court to prevent its cabin crew from striking but still faces the prospect of action, and the Department of Justice slapped on some conditions to its closer alliance with American Airlines. The attempted terrorist attack on an airplane in the US on Christmas Day has further added to the issues, with airline shares across Europe suffering. The UK's flagship airline closed down 3p at 189p, but was overtaken by Randgold Resources, which fell 95p to 5075p as investors locked in profits.
It was not all bad for the travel industry as Tui Travel rallied after two consecutive days of falls. It rebounded as investors saw a buying opportunity closing up 5.5p at 253p.
A few of the banks fell as investors decided it was time to bank gains after the strength in Christmas week. The worst on the day was HSBC, which gave up 5.2p to 713.7p. The insurers, however, found favour, with Aviva finishing highest, up 10.6p to 398.7p.
On the growth market, the satellite broadband group Avanti Communications revealed it was raising a further £3m through a conditional placing of 750,000 shares, sending its stock down 22p to 440p. The group announced a £86m placing a little over a week ago as well as a £194m debt facility. The fundraising is to help launch its second satellite into space, after it sends the first one up next year.
Anglo Asian Mining, which focuses on exploration and development of gold and copper projects in Azerbaijan, retreated 4.05 per cent to 9p as it announced the issue of almost two million new shares of 1p each to chief executive Reza Vaziri. The move cancels $300,000 of debt owed to Mr Vaziri, and brings his stake up to 30.17 per cent.
Corporate news was slim on Aim, as it was on the main market, and the announcement of a first-half loss by Adalta Real, a commercial property investor, did not move the shares at all from 3.75p. The group swung from a £36,100 profit in the first half of 2008 to a £102,300 loss this year. During that time it sold healthcare decontamination business Dawmed International. Its executive chairman Kevin Gilmore said the group's change of focus "will produce a revenue stream of fees without requiring external funding" as well as looking at other development opportunities to help the group "punch above its weight".
Another group that invests in property, although probably not in the same postcode, is JSM Indochina. Its shares also remained flat after the company responded to speculation by saying no firm decisions had been taken on accelerating the return of uninvested cash to shareholders or the company's future strategy.