Once again Europe rallied out of the blocks, taking the lead from a strong Asian and record-breaking US session. Within the first hour of trading the FTSE had pushed through 7550 as it looked to move towards its record high.
US tax reform optimism continued to keep stocks buoyant. The vote on the combined bill in the House, looks set to take place today, whilst the Senate vote could be today or tomorrow. Either way, the Republicans are confident that with Senator Susan Collins back onside, John McCain not voting for health reasons means that bill should still be approved, giving Trump his first legislative victory since taking office.
The Dax was hovering around the flatline after an impressive previous session which saw the German index soar over 1.5% on the back of US tax reform plus domestic political progress on the potential of coalition talks between Angela Merkel’s CPU party and the opposition SPD. The Dax remains above a support at 13,300.
German Business sentiment slips
The final German IFO business sentiment survey of the year showed that business confidence unexpectedly slipped slightly in December to 117.2, falling from its record high in November of 117.5. This is the first survey since the German coalition talks broke down back in November and shows that the political uncertainty is having an impact on business confidence, albeit a very slight impact. The news just knocked the EUR/USD 10 points off its day’s high of $1.1828. The pair remain strongly supported at $1.18. It almost goes with out saying, the sooner the political vacuum in Germany can be filled, the better for German business.
EU dig in heels for no special treatment for UK
The pound continues to trade just shy of $1.34 after EU Chief negotiator Michel Barnier dug in his heels and insisted there was to be no special deal for the UK and no special deal of the City of London to accommodate financial services. His comments came late on Monday, just after Prime Minister Theresa May and her team met to discuss what kind of trade deal the UK will seek when talks start early next year. Theresa May’s team will have a full meeting today and the PM will have a tough job trying to pull the various fractions of her cabinet together. Too many headlines pointing to hard-line rifts could unnerve pound traders, in an otherwise quiet European session.
US futures point higher
US futures are pointing to a positive start after an awe inspiring previous session, which saw the Dow Jones close at a fresh all-time high, its 70th this year. Whilst the Nasdaq also breached 7000 for the first time ever. Interestingly, the dollar is refusing to play ball and is trading lower for its second straight session, despite the US tax bill almost having completed its path through Congress.
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