View the article online at http://citywire.co.uk/money/article/a647479
FTSE creeps towards 6,000 in tepid Santa rally
A weak Santa rally has helped the FTSE 100 move towards the 6,000 mark as fund managers look forward to 2013.
The FTSE 100 inched closer towards 6,000 in a tepid festive rally.
As the closing bell sounded at 12.30pm to mark the festive period with the FTSE sitting on 5,954 a gain of 14 points on the day. Continued uncertainty over how the US intends to implement $600 billion of spending cuts to stop its economy going over a cliff held the FTSE back.
The stocks on Christmas shopping lists include Burberry, which jumped 1.8% in anticipation of a bumper season for the fashion retailer.
Elsewhere Aberdeen Asset Management also had a decent morning, gaining 0.8%.
While the UK remains on a slow and bumpy road to recovery, Fidelity's UK equity team believes the picture is overall positive with 'an abundance of undervalued companies with good growth potential simply being ignored'.
Alex Wright, manager of the Fidelity UK Smaller Companies and Fidelity Special Values funds, said: 'With the market as a whole trading on a significant discount to long term averages, particularly in the small and mega cap sectors, I find myself generally positive about the prospects for equities in 2013.'
Wright believes that European Central Bank governor Mario Draghi's open-ended commitment to buy European government debt has 'significantly' reduced risk in the European financial system for the time being.
He does accept that it is unlikely to be 'plain sailing' from here, with a number of potentially serious economic obstacles on the radar, including most notably the stalemate in the US with regards to fiscal policy, geopolitical instability in the Middle East and social unrest in Europe.
However, for Wright this uncertainty creates a number of opportunities.
'The good news here is that I have been able to find plenty of undervalued companies in different parts of the market. Some of these are distressed situations, but some of them are good quality businesses that the market has just ignored,' Wright said.
“Additionally, I think the conditions are perfect for M&A activity, with record low interest rates, strong corporate balance sheets in large caps, bargain valuations in small caps, and the economic environment rewarding those organisations that can operate at maximum scale and efficiency.'
News sponsored by:
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
Andrew Friend, acting co-manager*, and Marcus Langlands Pearse, co-manager of the Henderson UK Property Unit Trust (HUKPUT), provide an overview of the key risks and opportunities for the UK commercial property market.
More about this:
Look up the funds
Look up the shares
- Burberry Group PLC
- Vedanta Resources PLC
- Kazakhmys PLC
- Xstrata PLC
- Aberdeen Asset Management PLC
- Fidelity Special Values PLC
Look up the fund managers
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.