UK & Europe
It’s a bit late for Santa rally but stocks have risen for the third day running on the eve of Christmas eve. Stock markets have been encouraged by a stabilisation in commodity prices which has picked up steam since the Chinese government announced plans to increase its budget deficit next year.
A rise in Chinese infrastructure projects as the government tries to meet its growth targets could bolster resource demand. China announced another step towards liberalisation of its financial markets on Wednesday with an extension to yuan trading hours in 2016.
More M&A chatter, this time from Syngenta AG (VX:SYNN) chairman Michael Demare that his company is in advanced talk over a tie-up is fuelling the belief that 2016 will see more mega-mergers, adding to positive sentiment. The Swiss company has been linked with DuPont (N:DD) and China National Chemical Corp but Mr Demare says there are more players involved with “the whole industry talking to each other.”
Resource shares continue to lead the bounce-back in thin trading on the FTSE 100 with Glencore (L:GLEN), Anglo American (L:AAL) and BHP Billiton (L:BLT) top three risers with Royal Dutch Shell (L:RDSa) and BP (L:BP) not far behind. Brent crude above $35 per barrel and copper above $2 per lb should be enough to fend off commodity sector bears into the year-end.
US
US stocks opened positively on Wednesday buoyed by a bounce in Apple shares (O:AAPL) and solid gains in the energy sector.
FX
The US Dollar was mixed on Wednesday after data showed durable goods orders unexpectedly declined in November whilst personal spending rose in line with expectations and consumer confidence grew.
The British pound fell briefly but remained positive after UK GDP growth unexpectedly slipped to 0.4% in the third quarter, down from previous estimates of 0.5% according to the ONS.
Commodities
Crude Oil saw a sharp short-covering rally with Brent and WTI crude contracts rising over 2% and 3% respectively after the IEA confirmed the inventories draw indicated by the API on Tuesday, reporting a decline of 5.8M barrels. Less than a week after the US Congress agreed a deal to lift the ban on US exports, the price of front-month WTI futures, the benchmark for US crude oil briefly rose to a premium over Brent, the international benchmark. The spread between Brent and WTI has reached parity without any US export deals being signed.
After a month of wild swings between $1050 and $1090 per oz, Gold has settled down in the past two days to trade just above $1070.
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