FTSE 8217 s Solid December Record

The FTSE-100 never had a losing December since 2003. Most impressively, the FTSE-100 has risen 3.4% in 2008 – the year of the crash, when other indices under performed.

Not a bad statistic for an index which has under performed most of its G7 peers in 2012. In fact, the FTSE-100 has yet to attain new highs for the year, something achieved by the Dax 30, Dow-30, S&P500 and NASDAQ.

UK GDP growth has finally hit positive in Q3 after three consecutive quarterly contractions. Unemployment has fallen to 7.8% and retail sales continue to hold robustly despite the post-Olympics payback. The return to positive growth may be a reason for the BoE to refrain from pursuing a fresh round of asset purchases in December.

This might not be necessarily negative for the index as markets anticipate the Federal Reserve to start up QE4 in order to renew the expiring portion of its Operation Twist. Such actions have proven to boost US as well as other G7 equities in the past. Additional Fed stimulus would also be justified by the lingering downside risks of the Fiscal Cliff in the event that neither an agreement nor an extension is reached.

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