Footsie lags as US tech forged ahead in 2020

Footsie lags as US tech forged ahead in 2020 (but the blue-chip index is tipped to rise this year)

The FTSE 100 is forecast for a rebound in 2021 after clocking up its worst year since the financial crisis.

The blue-chip index has lost 14 per cent of its value in 2020 as the coronavirus crisis knocked investor sentiment.

Around £166billion was wiped off the Footsie, which is now worth around £1.75trillion, as other markets made healthy gains despite the pandemic.

Off year: The FTSE 100 has lost 14 per cent of its value in 2020 as the coronavirus crisis knocked investor sentiment

In the US, the Nasdaq soared 42 per cent while the S&P has jumped 15 per cent. 

Tech giants such as Tesla, Facebook and Google owner Alphabet aided Nasdaq. Asian markets rocketed to record levels as they rebounded from a Covid shock.

Germany’s Dax ended 2020 up 3.5 per cent – just below all-time highs – boosted by tech stocks. But the Footsie has shown signs of recovery over the last month, driven by a trade deal signed with the EU on Christmas Eve and Covid vaccines. 

Analysts believe Government intervention to protect jobs and businesses hit by the economic shock triggered by the pandemic will pay off.

Joshua Mahony, senior markets analyst at IG, said: ‘Traders will be looking forward to a period of increasing stability and prosperity.

‘The swift actions taken on a governmental and central bank level have helped avoid what could have been a year filled with bankruptcies and economic collapse. Instead, UK business are looking towards spring as a target to blossom once again.’

There is also optimism around the pound, at its strongest level since May 2018. 

It added 0.3 per cent to $1.3677 against the dollar and climbed 0.5 per cent against the euro to €1.1135. The gains mean sterling has gained 3 per cent against the dollar this year.

There are also hopes that the FTSE 250, the Footsie’s smaller sister index, which is seen as a Brexit barometer because it is more exposed to British businesses, might boom next year.

It has fallen 6.4pc this year but many experts believe companies on the index currently look cheap.

Analysts point out that the type of many listed companies meant it suffered disproportionately in 2020. 

Many of its largest are banks, travel firms such as British Airways-owner IAG, and oil giants such as BP and Royal Dutch Shell, whose shares have been battered by a steep fall in oil prices.

The index is trying to attract more technology companies, and ministers have hinted that they would look to relax stock market regulations to encourage firms to list in London.