European equities ignore selling pressure

Pre-market pessimism foretold a fresh round of selling pressure this morning. However, European equities have shown a defiant unity in heading higher with the FTSE 100 up 26 points within the hour. 

London skyline
Source: Bloomberg

The last full week of the trading year is crammed with economic announcements ensuring that, rather than take their foot off the gas, traders retain their full focus. Last week saw the Dow Jones have a triple-digit range on every trading day of the week, while the FTSE sold off by 342 points.

A fresh perspective on Monday morning looks to have given traders less of a pessimistic bent, and markets have retraced some of the aggressively oversold levels that saw out last week. Considering the last decade has seen the FTSE enjoy a positive December, it is going to take quite some recovery to maintain this record.

Last week’s liability has turned into this morning’s asset as the FTSE’s heavy weighting in oil & gas companies has helped drive the index higher. The likes of Tullow Oil, BG Group, Weir Group and Royal Dutch Shell have all sat at the top of the FTSE’s climbers list.

BT could well be set to test the old adage that you should never return to a lost lover as it mulls over allegiances with either EE or its old flame O2.

Greggs finally looks to be enjoying a 'Goldilocks' moment, following a year when the weather was either too hot or too cold. The last six months look to have been just right as the high-street baker upgraded its year-end targets. 

Regardless of how healthy the US economic data has been of late, Europe’s collapse has dragged US equities with it. Even with the bounce seen in oil during Asian trading hours, pressure of oversupply looks likely to be in place for some time to come with UAE oil ministers expecting oil to get as low as $40 a barrel before OPEC changes its stance on production levels.

Ahead of the open we expect the Dow to start 80 points higher at 17,360. 

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