Post-election and the FTSE100 continues its positive run higher on the back of the decisive yet surprising result. Not only are global markets reacting from the election but the well-received jobs report in the US also did its bit to boost trading on Friday. Despite the positive moves on Friday markets in Europe were expected to open moderately lower ahead of the open, however this was soon wiped out and the FTSE is now trading above 7,070.
Economic data is a thin on the ground this morning with the UK bracing itself for the BoE rate decision, however with very little expected in terms of changes, this will of course be another non event. There will be a focus on when the chancellor will deliver a new budget. The market expects to hear an announcement within the next few weeks on a new budget as the chancellor has to find a way to work manifesto promises like an extra £8bn for the NHS, a freeze in rail fares and cutting taxes.
Greece is yet again dominating the session, and is likely to dominate the week as today’s Euro area finance ministers meeting has the country and a possible deal at the top of the agenda. Athens is still seeking a deal that would give Greece the ability to payback the €7.2bn owed in the next few weeks to both the ECB and the IMF.
For me the rhetoric is too strong this time around for the IMG and ECB to just assist in kicking the can down the road. We have moved in some areas, and Greece today is urging the Eurozone ministers to recognize the progress they have been making. However with the progress only within talks and there still being no sign of a deal, I think a default is still the most likely option.
Within the FTSE Sage Group (LONDON:SGE) topped the leader board as well as strong performances from mining stocks after China cut interest rates by 25 basis points. A surge in crude oil prices saw oil companies push higher, and a move higher for house builders came as the good feeling from Friday’s election result remained in place. Supermarkets also showed some gains as Tesco (LONDON:TSCO)’s sale of its mobile business gathered pace with O2 and Talk Talk both circling.
Tesco also announced over the weekend that it was parting company with its auditors of 32 years PwC. Broker downgrades hit Intercontinental Hotels, and financial stocks such as St James’ Place and HSBC traded lower as Greek fears circled and HSBC was still mulling over a move away from the UK.