Market Comments

Last week’s equity market moves higher have been added to today, as traders have been able to muster up enough enthusiasm, partially due to the prospect of this shortened week.

UK markets

It is hardly surprising given the time of year but both the corporate and economic calendars are sparsely populated today as traders look to tidy up their affairs before the end of year. Last week’s equity charge higher has been added to today although not quite with the same gusto. The possibility of the last decade’s worth of higher closes in December for the FTSE ending is not mathematically over, but time is surely running out. A higher close in December for the FTSE, having dropped by 540 points in the first two weeks, was always going to be a tough ask for a rally even if Santa is backing you.

A mixed day for food retailers as M&S and Morrisons both sit at the top end of the FTSE movers list, while embattled Tesco shares are once again resident in the list of most struggling equities. It has been a tough year for Kingfisher as Europe’s love affair with DIY has struggled – and proving that it is not all plain sailing when expanding in China, the company has finally managed to offload a 70% stake in its loss-making B&Q China business for £140 million to Wumei holdings. The drift in oil prices has been replicated in oil producers while consumers have all edged higher. These moves are not enough to see either group join the FTSE’s big movers list, but continue an undercurrent of sentiment that has hung over oil-related equities for some time.

US markets

Momentum might be dwindling with European markets but not so in the US. The Dow is fewer than 100 points away from the 18,000 level and is now up on the month. The ‘risk on’ mind-set has been wholeheartedly taken on board by US traders, and moves the Dow has seen over the last few days have not been seen since 2011. Today’s economic calendar is whisper quiet but tomorrow will offer a host of data that, given recent history, could well be enough to carry markets above their previous December highs.

Commodities

Today’s moves in commodities have been of the more sedate variety as the aggressive volatility of the last few weeks looks to ease. Gold has drifted just under the $1200 level while still remaining just above the 50-day moving average. Saudi oil minister Ali Al-Naimi has kept the pressure on the spot price by confirming that it would be able to increase supply to the market if any fresh avenue of demand were to materialise. This attitude of ‘whatever it takes’ looks remarkably familiar to that incorporated by the ECB president Mario Draghi when trying to convince the markets. Of course, Saudi oil wells are probably deeper than ECB pockets, giving the comments a touch more credibility.

FX

The Russian rouble continues to offer volatility to traders as USD/RUB dropped by over 7% today, wiping out all of last week’s chaotic changes. Even with these moves the rouble is still a third weaker against the US dollar than it was at the beginning of October. With western sanctions and weak oil prices unlikely to disappear anytime soon this looks like it will continue to offer traders fruitful dealing for some time to come. The Swiss National Bank’s negative deposit interest rate looks to have already been assimilated into traders’ minds as EUR/CHF continues to hover above the €1.20 level.