Santa Rally Pushes FTSE 100 To Record High
CMC Markets | Dec 21, 2017 16:14
Europe
The FTSE 100 is the standout performer in Europe as it reached a fresh all-time high. The market has cleared the 7600 mark, for the first time ever. Since consumer goods like Reckitt Benckiser (LON:RB), Diageo (LON:DGE) and Tesco (LON:TSCO) are some of the biggest risers on the day, the Santa rally is certainly underway.
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The FTSE 100’s relatively high proportion of commodity stocks is also giving it a boost as BP (LON:BP), Royal Dutch Shell (LON:RDSa), BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) are all higher on the day.
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Voting in the Catalan regional elections is underway. The region is currently under direct rule from the Madrid government, and the Catalan nationalists are hoping to secure a majority. The poll are showing that polarity for pro-independence politicians is neck and neck with those who wish to maintain the status quo. The IBEX 35 is holding up well considering the potential upheaval.
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The DAX, CAC 40 and FTSE MIB are pushing higher into the close, but volatility is low. Investors are winding down their positions ahead of Christmas.
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US
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The bullish sentiment has returned to Wall Street somewhat as traders picked up some of the stocks that retreated on the back of the tax reforms being passed. The confirmation the US approved a $1.5 trillion tax reform yesterday was met with little enthusiasm, largely because it was priced in for some time. The Dow Jones, Nasdaq 100 and S&P 500 are in positive territory. The tax reform has been the main driver of the buying momentum this year, and traders have high hopes for President Trumps plans.
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The US economy grew by 3.2% in the third-quarter, and that was an improvement on the previous reading of 3.1%, but the consensus was for a reading of 3.3%.US jobless claims jumped to 245,000, up from 225,000, and traders were expecting a reading of 231,000. The American economy is in rude health, and when the traders will be keen to see the effects of the new tax reforms when they are implemented.
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FX
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GBP/USD has been creeping lower since late November, but the wider trend from March has been positive and is still intact. Trend line support may come into play in the 1.3300 region. Sterling was already sliding against the US dollar, and the positive revised reading of US GDP put further pressure on the pound.
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EUR/USD is largely unchanged on the day due to it being a slow news day on the Continent. The euro has been rising against the US dollar since early November, which fits in with the wider trend of 2017. The greenback has lost value recently as traders are wondering how beneficial to the US economy will be the new tax reforms actually be.
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USD/CAD sold off heavily after the Canadian inflation rate jumped to 2.1% in November, up from 1.4% in October and economists were expecting reading of 2%. The surge in the cost of living pushed the USD/CAD to a one week low, but the market remains in it range bound. The currency pair has spent a lot of time lately in the 1.2700 to 1.2900 range.
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Commodities
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Gold is slightly higher on the session and volatility has been low today. The metal has been edging higher for over one week and is currently eyeing the 200-day moving average at $1269, and if that metric is cleared it could pave the way to re-target $1300, Gold has an inverse relationship with US interest rates, and seeing as the Federal Reserve may not hike again for a few months, we could see the gold market rally.
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WTI and Brent Crude are having a lacklustre session, and both oil contracts are experiencing low volatility. The oil market hasn’t moved much in December, but the positive trend that it has been in place since March is still intact.
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The repair work on the Forties pipeline is going well, and should be completed over Christmas.
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