Global markets move higher

Heading into the close the FTSE 100 is up 70 points, dragged higher by eager European markets keen to hang onto the coat tails of their US counterparts.

European markets raced into the blue in early morning trading, as serious dents were made into December losses following the US markets' euphoria last night. However 24 hours can be a long time, and in the cold light of day this morning US traders have been a little more circumspect with their valuations. The cloud of uncertainty that was the Federal Open Market Committee’s tapering strategy has now been partially lifted and traders have been surveying the demystified landscape.

UK markets move higher

This morning Europe was in full agreement; not, unfortunately, on some tricky European-wide policy agreement, but that they would follow the example set by US traders following last night’s FOMC statement and move the markets higher. Forming opinions on market sentiment at the time of year when volumes naturally drift can be tricky, however it will be interesting to see if indices around the EU are able to maintain momentum. The impression prior to last night’s events was that these indices were as dependent, if not more so, to the quantitative easing process than their US counterparts.

Buy-on-dip to return?

After the enthusiastic reaction of the US markets following last night’s FOMC statement, it is possibly no surprise that having a night to reflect on the implications has seen a more measured response in the early trading session. The current levels of these indices mean that the possibility of a Christmas rally will be a more closely-run thing on the far side of the Atlantic. 

Further improvements in economic data will be needed in order to trigger the next reduction of the debt-buying scheme. Judging by last night’s market reaction, this would be received as further confirmation that the US is heading back to the good old days rather than as something to be feared. Now that the uncertainty of the 'will they, won’t they' debate is out of the way, and the support of the longer-term interest rate forward guidance has been given, we could be set to see the re-emergence of the buy-on-dip traders.

Gold and copper test followers

As with so many sectors, last night’s FOMC statement has been a catalyst, and in the morning session gold once again tested the bulls' commitment by fleetingly heading below $1200.  

Although having benefited from several weeks’ worth of rally, it looks like copper could be another metal about to test the commitment of its followers.

USD/JPY at five-year high

Now that USD/JPY is trading with a Y104 handle it looks set to close up for an eighth straight week, and is currently trading at five-year highs. After last night’s squeeze GBP/USD has settled down somewhat, and is now hovering just below the 1.6400 level. In contrast EUR/USD has seen its six-week rally abruptly halted as it has fallen below 1.3700. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.