UK markets
Yesterday may have been the day that the December selling stopped and the Santa rally began, and that picture seems to be reinforced today. We have seen further attempts to push indices down but end-of-year buyers appear to be returning in force, with European indices firmly off their lows and the FTSE 100 consolidating its hold above 6300. Dixons Carphone continues to sit at the top of the board after its maiden first-half results, which proved sufficient to justify the rally in the share price over the past few months. Meanwhile oil and mining names crept higher, on hopes that raw materials prices may be girding themselves up for a late bounce to end the year. European indices look at lot healthier than they did just two days ago, helped along by a eurozone CPI figure that remained in-line with expectations and assuaged building deflation fears.US markets
The gyrations in the US yesterday unsettled investors but there appears to be a degree of confidence that tonight’s Fed statement will not err too much on the hawkish side of things. Oil and its impact on inflation has boosted the cause of those that think the statement will see no change, and this grouping would thus argue that it sets up the year-end rally quite nicely. US markets remain nervous, but a suitably encouraging Fed could unleash an impressive upward move into the final days of the year.Commodities
Whisper it quietly, but we may be seeing signs of stabilisation in oil prices. Two days is not yet a long enough period to suggest that the bearish trend has run its course, but compared to the price action of recent weeks the past 48 hours have been distinctly encouraging for oil bulls. Brent at $58.80 and WTI at $54 could be a decent floor on which to build a rally. As equities and oil recover, gold has run out of friends, with its sojourn above $1200 seemingly at an end. Absent some remarkable dovishness from the Fed tonight, the outlook for gold seems bleak once again.FX
Data from the UK and the eurozone this morning saw rallies for the pound and the euro against the US dollar, but the US currency has staged an impressive rebound during the course of the afternoon. It seems unlikely the lacklustre US CPI reading was behind the bounce; rather, dollar positioning appears to be shifting in expectation that tonight’s Fed statement should offer further concrete clues as to when the US central bank will begin hiking rates. Given the weak CPI figure, however, dollar bulls could be disappointed once again.
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