FTSE on track for best week since June

The FTSE 100 is trading marginally higher on the day as the index consolidates on impressive weekly gains that would mark the biggest rise since the week after the EU referendum. The rise in the benchmark is largely due to swathes of positive sentiment flowing across the channel with the fall in the pound since Monday adding a further boost.

European rally raises UK stocks

The week began with stock markets in the red after Sunday’s Italian referendum threatened to derail the Trump rally. However this pessimism was short-lived and with the Eurostoxx and German Dax both hitting year to date highs on Thursday, the FTSE has been lifted to trade back near the 7000 level. Yesterday’s announcement of a 9-month expansion to the ECB’s current Asset Purchase Program has provided more festive cheer to bulls. The rally seen this year is a good example of a bull market climbing a wall of worry, with several potential causes for a major correction failing to see a sustained period of lower prices. With concerns surrounding a Chinese hard landing, the EU referendum, the shock outcome of the US elections and ongoing potential for political carnage in the Eurozone, there has been many reasons for markets to plummet in 2016 - but as we head into the final few weeks of the year, benchmarks in Tokyo, Frankfurt, London and New York reside close to their annual highs.

Sterling pares gains

After a very strong rise in November that saw the pound usurp even the Trump-inspired US dollar to be the best performing of all major currencies for the month, December has begun with some mild selling in sterling. Whilst the currency hasn’t depreciated substantially it is lower against all its major crosses with the Canadian dollar the biggest beneficiary as the Loonie has risen due to a slightly hawkish BoC meeting and ongoing resilience in the oil price. The latest economic data for the UK serves as a warning sign that the ongoing indecision surrounding Brexit could become an increasingly bigger problem with industrial and manufacturing figures both contracting. Yesterday saw the legal challenge regarding whether the government needs Parliament’s authorisation to trigger Article 50 draw to a close and the president of the Supreme Court has promised a decision as as soon as possible.​