Markets banish gloom as Christmas looms

In mid-morning trading the FTSE 100 is 100 points higher, as stock markets make another attempt to create a festive rally.

London
Source: Bloomberg

The December bounce seems to have started in earnest, as European indices rally and unloved FTSE stocks find some buyers. Investors appear to be relatively unconcerned that tomorrow’s Federal Reserve meeting is still on the calendar, as year-end seasonality kicks in.

Given the heavy losses of the first weeks of December a bounce was always likely, and while it is hard to think how exactly Janet Yellen can stoke an equity rally tomorrow, it is entirely plausible that the heart will supplant the head for now, with investors deciding to enjoy the year-end bounce and endure the hangover come January.

A classic example of this has been the supermarkets; Kantar data this morning showed that only Sainsbury’s enjoyed any sales growth among the big four, with Tesco still in decline versus its peers and the challenger discount stores.

But for now the shares are up, with investors reasoning that Christmas will provide some positive news and provoke a short-term rally.

UK CPI figures were in line with expectations, but this modest growth was not enough to get the pound moving noticeably higher against the US dollar. Until Janet Yellen sits down tomorrow, most FX traders will therefore prefer to await developments, even with US CPI on the agenda for the afternoon. 

Ahead of the open, we expect the Dow Jones to start at 17,482, up 114 points from yesterday’s close. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.