The final leg of the Santa rally was certainly the strongest, with the FTSE set to finish its last full day of trading before Christmas over 1% higher. The biggest one day gain in December and a new record high.
The FTSE was taking its lead from the US which was moving higher in the afternoon, as investors continued to celebrate the passing of the US tax reform bill. The Senate and the House both passed the bill along party lines and it is now set to be signed by Trump before Christmas. Whilst is had looked like much of the bullishness towards the bill had been baked into the price of the stock market, investors are still keen to jump on board and push the rally higher.
US GDP Lower Than Expected
The dollar, however, was not in such a celebratory mood and was trading close to the flatline towards the end of the European session. An unexpected downward revision of the US 3rd quarter GDP has weighed slightly on sentiment towards the greenback sapping some of the shine from the tax bill euphoria. The US economy grew at 3.2% in the third quarter, marginally slower than the 3.3% forecast. However, putting this into perspective, it is still the strongest quarter of growth since 2015 and improvement on the Q1 3.1% GDP. All in all, President Trump will be feeling rather pleased with himself as he breaks for Christmas, with his first legislative win being a $1.5 trillion-dollar tax cut and news that the US economy is growing at the fastest rate in three years.
Catalan Elections
Here is Europe investors were also keeping an eye on the regional elections in Catalonia. The elections will serve as an indication of sentiment as to whether the independence movement is growing in force. Opinion polls are showing the race to close to call. An outright majority is still unlikely for the separatists at the moment, the parties haven’t been able to organise themselves to join forces for this election. The separatist drive is unlikely to recede anytime soon, however, we are also unlikely to see a repeat of the clashes on the street that we saw just a few months ago.
The first exit polls are due later this evening. The euro has remained buoyant throughout the day and even the euro is trading 1% higher, suggesting investors are not concerned that independence will happen anytime soon.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.