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Markets
European stocks rally set to continue
From the Financial Times of Tue, 23 Dec 2014 07:44:55 GMT

Tuesday 07.40 GMT European stock benchmarks are expected to make further gains at the start of the last full session in the region ahead of the Christmas break.

According to opening calls from IG, London’s FTSE 100 will rise 35 points, with the Xetra Dax 30 in Frankfurt called 34 points higher and the CAC 40 set to gain 15 points.

Brent, the global oil benchmark, continued to hold the $60 a barrel level, up 0.6 per cent at $60.49 a barrel while the price of gold was unchanged at $1178.07 per ounce.

Investors have been relieved that Brent crude has shown resilience above the $60 a barrel mark, helping wider sentiment stay positive on wider markets. Last week the oil benchmark touched a five-year intraday low of $58.50, after sliding nearly 50 per cent since the summer.

“With the crude market having been the anchor around the neck of global risk markets for the past six weeks, it stands to reason that a mere perception that we are seeing a stabilisation of oil prices is likely to provide breathing room for stocks and credit to catch a bid,” said Adrian Miller, director of fixed income strategy at GMP Securities.

“Having said that, we believe the primary catalyst to the better tone comes from last week’s Federal Reserve decision and basically positive message that confirmed a ‘patient’ Fed that is unlikely to hike [interest rates] until at least April while continuing to see positive developments from the US economy.”

The rouble’s rally entered its third day, tracking crude’s steadiness. The Russian currency is up 1.8 per cent, with Rbs54.58 required to buy a single dollar. At the height of the pressure on it last week, a dollar fetched Rbs80. It strengthened by 6.3 per cent on Monday and rose by 4.1 per cent last Friday.

The euro is up 0.1 per cent at $1.2238, while the pound is flat at $1.5594 as the dollar’s drift down at the end of its long ascent over 2014 continued to cool. The dollar index, which measures the US currency against a basket of its peers, slipped 0.1 per cent, eating into its gain of 10 per cent over 2014.

If the Asian session is anything to go by, volumes look set to ebb into the holiday. Equities markets in Asia-Pacific were already subdued by a national holiday in Japan and a paucity of economic news across the region.

Hong Kong’s Hang Seng was flat while the Shanghai Composite was down 1.7 per cent.

The debut of China’s Dalian Wanda in Hong Kong failed to lift the mood. Shares in the commercial property focused group, founded by Wang Jianlin, China’s second-richest man, were flat at HK$48 in their first day of trading on the Hong Kong stock exchange. Dalian Wanda last week raised $3.7bn in Hong Kong’s biggest initial public offering this year, with shares originally offered in a range of HK$41.80-HK$49.60.

Aviation Industry Corporation of China, the Hong Kong-listed Chinese aircraft manufacturer, rose by as much as 42 per cent to HK$0.89 after billionaire Li Ka-shing raised his stake, according to Bloomberg.

Elsewhere in Asia, Australia’s S&P ASX 200 was off 0.7 per cent.

The S&P 500 gained 0.4 per cent to finish the New York session at a record closing high of 2,078, with investors hopeful that the oil price has bottomed and relieved that US interest rates are unlikely to rise abruptly. Overall volumes were relatively modest as activity wound down ahead of the holiday break.

The FTSE All-World index is down 0.1 per cent. Gold is up 0.7 per cent at $1,182.50.



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