FTSE higher after strong US session

Morning trading has seen the FTSE 100 consolidate above 6800, after a standout day for US indices.

Canary Wharf
Source: Bloomberg

Risk appetite has rebounded in the last few sessions, with economic data coming in above expectations. Crucially, US data has turned around, and, while better, is not good enough to increase fears of faster tapering – yet another ‘Goldilocks moment’ has arrived.

The FTSE 100 opened strongly higher this morning but has edged back as some modest booking of profits got underway, but the bounce from 6700 remains intact and eyes have now shifted back to the 6880 target as the market attempts to break through here once again.

A potential saviour for Mothercare has appeared in the form of US firm Destination Maternity, and at a 28% premium to yesterday’s share price. The question is now whether any other bidders will be flushed out, and whether anyone is actually interested in Mothercare’s UK business, or just the more successful overseas divisions.

The much-hated rally will have acquired a few more enemies after yesterday’s move, but it is a signal that investors are still content to buy in when they feel the time is right. Jitters about the US economy's second quarter being as bad as Q1 have eased, and a good reading on non-farms tomorrow would be the pre-Independence Day icing on the cake.

Today’s jobs report from payroll company ADP should see further growth, but a speech from Janet Yellen this afternoon is one possible hurdle that may mean the ‘Dow 17,000’ headlines will have to wait another day. Ahead of the open, we expect the Dow Jones to start five points higher at 16,961.

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