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Markets are suprisingly calm ahead of the December Federal Open Market Committee meeting this week, as the potential jitters that Wednesday’s statement could induce are scarce. Once again mixed messages have been given by EU members sinmce manufacturing and service purchasing managers index figures have been released, however the weak French/strong German template shows no sign of changing.
Europe moves on
European markets appear to have turned a page on the rest of December's trading and started the week off at a healthy canter; by mid-afternoon most of the indices were up well over 1%, with the FTSE lagging behind as usual.
Aggreko has done its best to lift the tempo as its latest trading update confirmed contracts for both the 2014 Commonwealth Games in Glasgow and the 2014 FIFA World Cup in Brazil. The markets responded well and the shares were boosted by almost 10%.
RSA continues to suffer following last week’s board changes and profit-warning, as speculation mounts over the possibility that it will be taken over.
Almost a decade after selling off its mobile phone division, rumours are abound that BT are looking to move back into that market. Considering how well O2 have done since the separation it is maybe more surprising that it has taken so long to admit the error of their ways.
'Dectaper' given 35% chance
Wednesday's FOMC decision regarding the current debt-purchasing scheme continues to dominate the chat on trading floors, and the current institutional sentiment gives a 35% chance that we will see tapering start in December. The Federal Reserve has been talking about the possibility of this happening for some time and will no doubt hope the surprise factor has been well and truly factored in. A glance at the economic data releases out of Europe, specifically France, highlights how fragile recovery is in some of the EU member states and how susceptible they would be to any shift in US economic planning.
Gold to cause fireworks
The resilience of the copper market has carried on from last week as the metal now looks to be testing the $3.32 level. This six-week high looks well placed as futures trades infer a tightening in the physical supply of the metal.
Gold traders look particularly undecided in early trading as more yearly reviews are published, drumming home the poor performance of the metal in 2013. The looming squeeze of downward pressure from the trend and the supply-side viability issues for gold miners below the $1200 level look set to eventually cause fireworks.
EUR/USD fate awaits data
EUR/USD struggled to break through the 100-hour moving average this morning. It will now focus on the December month-high of 1.3811, but with plenty of EU and US data still to come this week reaching it is far from a forgone conclusion.
EUR/GBP, on the other hand, continues its December decent. It will be interesting to see if Tuesday morning’s raft of UK inflationary figures might be the catalyst to finally stop this move.