The oil-inspired selloff continues to dampen any pre-Christmas optimism, although opportunistic shorters are still keeping one eye on the oncoming ‘Santa Rally’ that is likely to kick off from next week.
The traditionally strong end-of-year period means that this week’s blip is potentially a gift for investors looking to spruce up their final performance figures for the year, and thus any weakness in coming sessions is still going to go into the ‘buying opportunity’ column.
Retailers have hit the headlines in London, as Sports Direct and SuperGroup posted updates. The former did well, hitting all the right notes, and in the right order, as it reported continued expansion in Europe along with a rise in earnings. However, the latter’s torrid year has seen no improvement thanks to the unseasonably warm weather of October.
An admittance of shortages in key lines reminds investors that this is a company that still hasn’t found its footing and continues to grapple with issues that, by now, should have been long sorted.
Eurozone watchers will be waiting to see what comes of the latest European Central Bank TLTRO operation, and while demand is expected to be stronger than the last time it still may not be enough to quell the idea that the ECB will be forced into quantitative easing in 2015.
The afternoon calendar is dominated by US retail sales figures, although energy stocks will remain under the spotlight after yesterday’s dive in oil prices. A steady climb higher in futures overnight indicates that dip buyers have not been entirely deterred by the dire price action. US consumers will be enjoying their pre-Christmas gift of lower oil prices, which should help to provide a sunnier outlook for retailers in the New Year.
Ahead of the open, we expect the Dow Jones to start 50 points higher at 17,583.