FTSE 100 surge driven by gold miners and entain

A takeover bid for Entain has helped drive the Ladbrokes owner sharply higher. Indeed, UK stocks are generally faring particularly well despite the UK finally being cut adrift of the EU. Dollar weakness is helping lift commodity prices, while traders have one eye on the Georgia runoffs which will determine the final make-up of the Senate and Congress. 

• FTSE 100 outperforms, with Entain leading the way.

• Commodity prices on the rise as the dollar comes under pressure.

• Georgia runoffs provide key event for the days ahead.

The FTSE 100 is kicking off 2021 in style, with the headline UK market enjoying an impressive 3% gain in early trade. With Brexit finally here, there are precious few signs of initial difficulties allaying some of the fears over what the eventual exit could look like. While there is typically plenty of speculation over what Brexit could look like, the deals focus on goods over services means that it may take some time to truly gauge how much of an impact this break up will have upon the economic growth prospects. Entain Group understandably leads the way after a rejected takeover bid from MGM Resorts highlighted the potential for a new enhanced offer in the near future. With the US providing the new frontier for gambling websites, it is clear that the sector could enjoy a period of substantial growth if they successfully tap into this newly-deregulated market. 

Commodity prices are enjoying a lucrative start to the year, with precious metal gains being followed up by similarly impressive upside for energy prices. Dollar weakness has been seen throughout the FX market as traders prepare for a year of economic recovery. However, while the likes of gold and silver are often seen as havens, they often perform best in the years following a crisis as highlighted by the 2009-11 bull-run. For investors this rise in precious metal prices provides a fresh round of buying for the likes of Polymetal and Fresnillo, with the miners providing the benefits of both reflecting underlying prices while also paying dividends.  

The week’s main event comes out of Georgia, in the form of the final two runoffs which will decide exactly who runs the Senate. While many had seen Democrat domination as an ideal scenario for markets, investors have grown accustomed to the idea of a split congress which restricts the more hard-line elements of Biden’s four-year plan. While Democrats remain unlikely to take both seats, the polls have been shifting in their favour as Trump’s team continue to push for a means to overturn the election result. From a market perspective, a Biden victory would mean more stimulus, and more infrastructure spending, but potentially at the expense of oil companies and the tech sector.  

Ahead of the open we expect the Dow Jones to open 179 points higher, at 30,785.