European stocks have opened strongly, rising to a three-day high on Tuesday. The Euro Stoxx 50 has risen back through 3400 while the FTSE 100 has reached above 6260, both the strongest since November 12.
Markets held up impressively well in the immediate aftermath of the Paris attacks and the worst weekly decline since August. The thinking goes that if markets don’t go down after a big weekly drop and a terrorist attack then the only alternative must be to go up.
There is still a question mark over the strength of the catalysts for today’s rally. Europe’s rally is tracking the gains in US markets that took the Dow Jones higher by over 200 points on Monday. The gains in the US were largely driven by a technical rebound in oil prices which saw Exxon (N:XOM) and Chevron (N:CVX) both rise over 3%, taking number one and two spot on the Dow. A rally based on oil is on shaky ground at best given crude prices are coming off three-month lows.
Gains in Europe were supported by a rise in German investor confidence which has rebounded from one year lows according to ZEW.
The pound was mostly unchanged after data showed the UK remained in deflation for a second month running.
Copper prices have hit fresh 6 year lows, having declined for ten days on the trot. Mining companies including Glencore (L:GLEN), which is up by 4% are looking through the drop in copper prices and rising with Asian stocks and oil prices.
Shares of Smiths Group (L:SMIN) are top of the FTSE 100, having risen a dramatic 10% after surprising markets with sales that fell only 4% in the last quarter. A bigger sales drop was expected in light of reduced demand from the oil and gas sector which is paring back capital expenditure. It was smith’s other business lines such as in the medical field that helped weather the O&G storm.
US stocks look set for a stronger open ahead of key inflation data leading into the Federal Reserve’s hotly anticipated meeting in December and earnings from retail giants Wal-Mart (N:WMT) and Home Depot.
USA pre-opening levels
S&P 500: 6 points higher at 2,059
Dow Jones: 41 points higher at 17,524
Nasdaq 100: 14 points higher at 4,579
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