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We’ve been able to dust off the ‘all time highs’ moniker for the DAX and US indices recently, but the FTSE 100 version remains in the cupboard unused. We may, however finally be seeing the index making another run towards the recent high of 6894 and then on to 6900, as the London market looks to emulate its cousins in Germany and the US. Even with an easing European Central Bank and in-line US job numbers, the index still looks uncomfortable at these levels. Although the picture from last week is supportive, the week ahead is not quite so encouraging, with only retail sales from the US and Japan in the latter half of the week offering hope of positive catalysts.
TSB’s IPO has been priced this morning, ahead of the impending flotation. The IG grey market has moved lower in response to the decision to price the offering at around 15% below book value, but this move has already met with approval from clients who are beginning to view the lower offer as a more compelling valuation and a prudent recognition that the recent flood of IPOs has muddied the waters somewhat.
US markets must rely on Friday’s job number if they are to retain the upward move that was so clearly in evidence last week. The remarkable fact is that around a quarter of the S&P 500’s gains for the year so far were made in the past week. While this might be a damning repudiation of the ‘sell in May’ theory, for 2014 at least, the fact is that rallies need fresh news to sustain them, and aside from retail sales later this week that news is worryingly absent.