Markets rediscover their Christmas cheer

In mid-morning trading indices across Europe are sharply higher, as markets get the Christmas feeling once again. 

Source: Bloomberg

Last week ended poorly for those hoping for a festive rally, but hopes have been revived this morning, as markets put on some decent gains early on in the session.

Glencore and Anglo American are at the top of the FTSE leaderboard, which will tell you something about the nature of the rally – with little news expected this week, opportunistic bargain hunting and general festive sentiment will drive any bullish moves that develop over the next few days.

Spanish banking stocks have taken a hit this morning as investors ponder the rocky outlook for the country now that voters have rejected austerity measures.

There has been little read-across so far to other European markets, but the popular vote should send warning signals that continued austerity is unlikely to be accepted by voters for much longer.

ITV shares are in the ascendant this morning thanks to bid speculation over the weekend. Having enjoyed a 26% rise in 2015, there could be more to come for ITV shareholders if a bidding war does develop. With a strong stable of content, plus excellent ad revenues, ITV looks to be ripe for the picking.

Today’s calendar is relatively light, and with liquidity getting thinner over the course of the week the potential for exaggerated moves is very real. The default direction is still likely to be up, given past performance, but US indices have a lot of heavy lifting ahead of them to recover from the swift drop of Thursday and Friday.

Ahead of the open, we expect the Dow Jones to start at 17,248, up 120 points from Friday’s close.

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