FTSE reluctant to get carried away

The FTSE continues to lag behind all of its major European counterparts as we head towards the final month of the year.

Now that we are two weeks into November, seasoned traders will be conscious that a Christmas rally could well be around the corner. A Christmas rally is a creature just as mythical as jolly Santa Claus, but rather less reliable – regardless of how well-behaved you have been over the rest of the year.

A quick glance over the performance of the FTSE 100 year-to-date shows that the index is up 13.37%. At numerous times in 2013 traders would have been only too happy to have seen that. However, when compared to some of our European counterparts now, it begins to look a little disappointing.

The German DAX is currently up 23.94% – an impressive return, especially when you consider the wobbles that Germany’s export-driven economy has had to suffer. Both external demands in Asia, as it went through a rough patch earlier in the year, and the volatility of the euro have combined to take the shine off exports.

The French CAC has also left the FTSE in the shade, with returns of 21.35% over 2013. French President Francois Hollande is now officially the most unpopular ruling president in the last 60 years, and has overseen a change in the French tax system that has left many in disbelief and the rich heading for the border.

Could we see the FTSE catch up and deliver returns in excess of 20%? That seems a touch optimistic. More realistically, perhaps a closing of the gap might be in order.

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