Stocks rallied on the final trading day of the year to help the FTSE 100 gain by 5.7%, or 440 points, over the course of 2024.

The index hit an all-time high of 8,445.8 on 15 May as optimism grew in the first half of a strong recovery and a series of interest rate cuts b y the year end.

However, sentiment suffered a setback as the economy failed to maintain its momentum and the new Labour government warned of worsening times ahead. Towards the end of the year, sticky inflation and the Bank of England’s more cautious tone, caused a dip in consumer confidence and among investors.

Despite an upturn in M&A activity, new entrants to the stock market were few and far between and companies continued to leave. R&D firm DG Innovate became the latest, announcing today that it would quit the marker next month, blaming the prospectus rules and a lack of interest from domestic institutional investors in early-stage firms.

Analysts at AJ Bell said: “No-one seems interested in the UK equity market, other than to bash it for failing to attract more new flotations and the defection of some companies to other exchanges (even if many global rivals suffered a similar dearth of new joiners in 2024).”

This lack of enthusiasm for London’s top stock market index meant it lagged behind its US rival for another year, experts said.

A final flurry in the shortened session saw the FTSE 100 close 52.01 points higher at 8,173.02. It was supported by mining and oil stocks such as Endeavour and Shell as well as retailer JD Sports. Commodity stocks were higher following favourable manufacturing data for China in December.

Markets in Germany, Italy and Switzerland were among those shut on New Year’s Eve, while Paris also had a shortened session. US stock futures pointed to a higher open.

Oil prices saw moderate gains as strong economic data from China and a weakening US dollar provided support, while expectations of a more cautious approach to quantitative easing by the US Federal Reserve limited further upside.

China, the world’s largest oil importer, announced a record fiscal stimulus package aimed at stimulating economic activity.

Brent crude futures rose by 0.7%, trading at $74.48 per barrel, while US West Texas Intermediate (WTI) crude climbed 0.6%, settling at $71.42.

Comment: What must London do to stimulate the stock market?