UK’s FTSE 100 was poised for its best annual performance in five years on the back of gains in commodity-linked and industrial stocks, but the index fell in Friday’s holiday-thinned trading.
The benchmark index (.FTSE) declined 0.4% in morning trade, hit by concerns around surging COVID-19 cases as the UK reported a record rise in daily infections.
British blue-chip shares have gained 14.2% this year, underperforming their European and U.S. peers that have scaled multiple record highs.
“There are still concerns that the true impact of Brexit hasn’t been very obvious just because of the COVID-19 pandemic and the logistics crisis caused by the lockdowns,” said David Madden, market analyst at Equiti Capital.
“International fund managers are overall still taking money out of the UK and putting it elsewhere.”
Mining (.FTNMX551020) and industrial stocks (.FTNMX502050) were among the top boosts to the FTSE 100 this year, with miner and trader Glencore (GLEN.L) and construction supplier Ferguson (FERG.L) both rising more than 50% in 2021.
Madden said heavy industries got a boost this year from a build of pent-up demand during lockdowns that far outpaced supply in this year’s economic reopening.
“Industrials saw the orders jump to the roof and in turn they went into overdrive territory,” he said.
Energy stocks (.FTNMX601010) were on track for their best year since 2016, ending a three-year slump, as the global economic recovery and lower output sparked the biggest jump in crude oil prices in more than a decade.
The FTSE 100 was on Friday pulled down by a 0.7% slide in life insurance stocks (.FTNMX402040) and a 0.6% fall in heavyweight drugmakers AstraZeneca (AZN.L) and GlaxoSmithKline (GSK.L).
The mid-cap FTSE 250 index (.FTMC) declined 0.2% due to a nearly 1% drop in travel and leisure stocks (.FTNMX405010), but was on track for its seventh consecutive quarter of gains.
UK markets will close early at 1230 GMT on Friday for the New Year’s Eve holiday and will remain closed on Monday.