4 Feb 2022
The FTSE 100 outperformed (+4.2% in the quarter) the other indices (250 and All Share) because big resource shares (oil, gas, metals) did well as the market began to realise that high commodity prices promised outstanding profits. Free cash flow would be enhanced by the fact that the environmental lobby has bullied these businesses out of making the investments that would once have been expected. Instead the likes of BP (sorry, bp) have begged for forgiveness by bidding up the price of offshore wind licences.
For the full year, all the main UK indices rose by just over 14%, perhaps a sign of a fairly indiscriminate wall of money looking for a home. This was not a great result by international standards: the S&P 500 returned 27% in 2021.
Meanwhile UK gilts began to show some signs that the Bank of England Asset Purchase Facility was nearly full, meaning that 2022 gilt auctions would be offered to an unrigged market. In December the 10 year yield rose from 0.82% to 0.97% and (spoiler alert) in January was set to soar up through 1%.