Markets driven higher by US optimism

The FTSE 100 has joined major markets in bouncing higher at the start of the week.

London skyline
Source: Bloomberg

As welcome as this morning’s moves will be to traders after what was a tough week, a healthy dose of cynicism still exists. Last week saw awful German data out on each of the last three trading days and it is hard to believe that this week’s ZEW, inflation and GDP figures will paint a picture that is any more appealing. With all of this looming, traders are enjoying the bounce but are fearful of its longevity.

Slightly mixed messages are coming out of Balfour Beatty this morning, following the announcement that pre-tax profits have collapsed by 53%. It has also confirmed it has turned down a second offer from Carillion stating that 'it saw no strategic logic for the merger other than to enhance the earnings', something it appears Balfour Beatty could do with.

GlaxoSmithKline has confirmed it is about to embark on clinical trials for a new vaccine for the deadly Ebola virus. While this is welcome news, it is probably still some time away considering the regulatory hurdle still needing to be cleared.  

Friday’s news that Russian military exercises have come to a conclusion on the outskirts of Ukraine, coupled with a more proactive strategy from the White House in dealing with Isis forces in Iraq, triggered a market rally. The US corporate calendar is now looking a little bare, and sentiment is likely to be guided by a combination of economic releases and the developing global macro picture. Ahead of the open we expect the Dow Jones to start 37 points higher at 16,590.

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