Market Comments

Heading into the close the FTSE 100 is some 70 points higher, holding on to gains after a somewhat indecisive session.

UK markets

London’s market continues to maintain its form despite an earlier wobble around options expiry. Having gained over 6% from the lows the question could justifiably be asked where the next reason for a rally is coming from, but this question is easily answered by the simple fact that it is nearly Christmas and hallowed tradition requires markets to remain cheery until the end of trading next Wednesday. Oil has risen by around 1.3% today and this has allowed the bargain hunters a further excuse to buy shares in the likes of Tullow Oil and BP, while the festive cheer has extended even to such dire performers as Tesco and Morrisons, with the former up 5% and the latter rising over 3%. European markets have been weaker but patient investors have been rewarded, as the overnight froth dissipates and buyers find an opportunity to step in at more congenial levels.

US markets

Friday has not seen the euphoric buying of the previous two sessions but this is to be expected at any time of year. There will still be a sizeable number of investors and active managers that find themselves with a less than favourable allocation to equity markets, which means that the indecent stampede of recent days should find renewed momentum as Christmas looms. Signs of dissent from Fed member Kocherlakota signal that not all is well on the committee, which has stymied the run towards 18,000, but overall the new week should see the usual low volume push higher that is characteristic of the final sessions before Christmas.

Commodities

Oil prices continued to receive support with Brent prices adding 1.55% to its previous close level, currently trading at $60.71 with WTI up 1.75% trading at $56.05. However, given the sustained move lower off their respective June highs, it remains to be seen whether we are seeing a turnaround rather than just a dead cat bounce into the New Year as traders begin to wind down positions heading into the years end. Despite gold prices adding 0.18% on the day on the back of a continued pick up in oil prices, price action has failed to post a close above its rangebound consolidation of $1,200 and $1,197, which the market will be looking for in order to confirm a directional bias.

FX

A relatively muted day in the currency markets on the back of a thin economic data calendar saw the biggest move in the majors coming in USD/JPY, which added 0.38% and currently trading at Y119.42. The Japanese yen saw losses against the majority of its major counterparts on Friday following a confident Bank of Japan governor Kuroda stating he was confident in achieving the banks’ price target policy in spite of deflationary pressures emanating from sliding oil prices. The Canadian dollar lost ground on Friday with the biggest move being seen in USD/CAD, which added 0.24%, following the release of its Consumer Price Index (CPI) data, for which its core level came in at -0.2% missing market expectations of 0.1% month on month. Data also underwhelmed expectations on a year-on-year basis of 2.4%, coming in at 2.1%.