With the likes of Germany, Italy and Switzerland all closed for the day, market participants have in many respects used the lack of news-flow, low liquidity levels and the urgency to get home for Christmas Eve to allow other benchmark indices to drift higher as we finish up a short trading day.
Elsewhere, copper has pushed higher for a third day, boosted by the actions of the PBOC. This has seen Polymetal International take the front running spot on the UK blue chip index.
BSkyB has also been in favour owing to news that it would take a $350,000 stake in Jaunt, a young technology company specialising in the capture and display of 360 degree video content.
Having seen great demand yesterday, ARM Holdings has been subject to some profit taking today, falling 1.35%.
Big trouble in China?
The buoyancy in western equity markets would indicate that investors have not exuded a great deal of concern over the liquidity issues in China.
Any tensions in money markets have been alleviated as the People’s Bank of China inject additional funds. And reports suggest that the Chinese media have been banned from referring to the tight monetary conditions as a ‘credit crunch’.
Should this ‘head in the sand’ approach continue into the New Year, it may well transpire that solvency is called into question rather than liquidity.
US anticipates key data releases
Key macro data in the shape of new home sales and durable goods orders will be released just before the equity markets open today. Both sets of numbers are expected to see an improvement on last month. Any failure to meet consensus could provide a dilemma for the incoming Fed Chairperson in respect of QE and forward guidance.
Both anecdotal and retail tracking data would suggest that retail sales in December may be below par – something of a problem for the US economy given how relevant the consumer is to GDP upside.
And finally, as we come to the end of 2013, those investors who adopted a less emotional stance to the most hated equity rally in history are having their just rewards. The Dow Jones is currently set to open above the 16300 level.