The FTSE 100 is trading higher by around 20 points and has moved back towards the top of its recent range around 7550. The Pound is having a quiet morning with no clear moves seen against its major peers.
Santa Rally fails to come early
Strong moves higher in European equities on Monday had many believing the Santa Rally had begun early with sizable gains seen not only in London but also in Frankfurt, Paris and Madrid. However this early bid has since subsided on the continent and the Eurostoxx index is in fact now lower on the week. The FTSE 100 remains in the green and is outperforming its continental peers who have possibly been hampered by a fairly strong rise in the single currency this week. It should be noted that the Santa Rally actually refers to a rise in stocks during the week between Christmas and New Year’s and therefore to claim it has faltered already would be wide of the mark. Nonetheless the FTSE remains well supported above 7500 and within striking distance of its all-time high.
Catalans head to the polls
There are hopes that today could mark the end of what has been a tumultuous political time in Spain, as Catalans head to the polls to elect their new regional government. The hostility between the region and the central government in Madrid goes back a long time but the holding of an unconstitutional independence referendum in early October saw tensions ratcheted up several notches, with the vote returning a sweeping victory for independence albeit it on a low turnout of under 50%.
A unilateral declaration of independence from the Catalan government was met with the triggering of Article 155 in Madrid which essentially removed them from office, dissolving the regional parliament and announcing an early election for today. Unfortunately, the vote may not return a clear verdict and draw a line under the matter with the most likely outcome being a hung government. Spanish stocks had been performing admirably throughout the first part of the year but the recent uncertainty surrounding the possible separation of the country’s most affluent region has taken its toll with the IBEX 35 treading water in recent months.