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A bounce in the DAX yesterday provided the springboard to fresh gains for London this morning, with a bid of M&A spice thrown in for good measure just to keep things bubbling over.
The European parliament could soon be besieged by a wave of new Eurosceptic MEPs, but the victory of governing parties in Germany and Italy has reassured everyone that Berlin will keep a strong hand on the tiller and Rome will not deviate from agreed reforms. Even Ukraine is less of a concern, as the new president signals an attempt at rapprochement with Russia. The broader political situation is thus providing few unpleasant surprises, and with little macro data of note out this morning traders have taken the opportunity to push the market higher.
InterContinental Hotels has reportedly said ‘no’ to a £6 billion bid, and yet again suspicions are rife that a US firm is looking to engage in some fancy tax footwork by domiciling in Britain. If such an attempt were to succeed, it would probably be the first and last of its kind since Congress would try to act quickly to stop any more US firms heading for the departure lounge.
The S&P 500 closed out the week at the magic 1900 level, easing over the finish line in the closing minutes of the session. Sentiment indices from around the world indicate that this has merely brought out a fresh wave of shorting, but we may be seeing the beginnings of a meaningful breakout after weeks of frustrating chop in the markets. US economic data is back with a vengeance and all eyes will be on durable goods, which are forecast to be a touch weaker than last month.