The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.
Markets dislike uncertainty so, while the notion of more shallow liquidity might have had the consequence of a protracted sell-off, market participants can now focus on the underlying issues without the constant ‘will they, won’t they’ taper concerns.
The FTSE 100 has, as is becoming the norm, underperformed next to its European counterparts, with instances of bullish upside tapering off as the weighty mining sector hampers any follow-through in the rally. Nevertheless, the benchmark has gained 0.9%, with Standard Life leading the charge on news that it is to continue its strategy to expand in Asia. The company has established an Asia advisory board in order to scale-up its growth across the region.
Unsurprisingly, gold has taken the news of the taper to heart and fallen back momentarily below the $1200/oz mark. Prices have not seen a close below this key metric since August 2010, despite making a brief foray to $1180/oz back in the summer. There is room to believe that mining companies might now cut production in order to offset the falling profitability of the precious metal.
Retail sales for the month came in as expected, with a 0.3% gain; while the 2% rise year-on-year is much better than the meagre 0.2% gain this time last year, such a small rise does not imply a great degree of disposable income or confidence amongst British consumers.
Later this afternoon the US macro calendar will furnish us with existing home sales data, as well as business data from the Federal Reserve Bank of Philadelphia. Yesterday provided a bullish outlook on housing starts and underpins the strong recovery in the US to date. Existing sales are expected to decline marginally, down to 5.04m units from 5.12m in November, in line with the recent falling trend which may in part be down to seasonality.
The Dow Jones is presently set to open slightly lower, down 12 points at 16,155.