There has been a small bounce in European equities this morning, with Friday’s solid finish on Wall Street providing a boost.
Shares in America were lifted at the end of last week by strong quarterly results from Technology bellwethers Oracle and Research In Motion, and a similar uplift occurred in the tech sector in Asia overnight.
By 10.20am the FTSE 100 had risen 31 points or 0.6% to 5228, raised by recovering financial stocks, as well as oil stocks that are benefitting from the price of crude oil.
Banks were up pretty much across the board, with Lloyds Banking Group, Royal Bank of Scotland, Standard Chartered and HSBC all up around 1%, while Barclays added nearly 2%.
Crude oil remains well above $70 per barrel, with February US light crude futures up around 40 cents at $74 per barrel this morning, which is helping to keep energy stocks looking attractive. Both BP and Shell are up more than 1% too; with these companies being so highly capitalised and having such a high weighting they added twelve points to the FTSE between them.
Cairn Energy was another stock in this sector performing well. The company announced today that it has secured a rig for drilling offshore from Greenland. The Chief Executive said in a statement, ‘We are delighted to have secured a rig that allows Cairn to move forward with its Greenland drilling programme in 2010, a year earlier than previously scheduled. We are now equipped to commence drilling with a vessel that offers considerable operational flexibility.’ Cairn gained more than 5% in the wake of the news, rising to 3210p.
London Stock Exchange has agreed to take over rival platform Turquoise by taking a 60% stake in the loss-making venture. LSE will incur up to £20 million of exceptional costs from the deal, but says it will merge Turquoise with off-exchange platform, Baikal, in order to create a new pan-Europe venture. Turquoise is a so-called ‘dark pool’ platform, allowing anonymous trading of shares off-exchange – it was started by nine investment banks last year as an alternative to LSE.
The economic calendar is once again quite thin today, but we do have third-quarter GDP figures for the UK due out tomorrow. A Bloomberg survey of economists anticipates that we will still not see growth: GDP is expected to shrink by 0.1% for the quarter. The frustrating thing about GDP figures is, of course, just how lagging they are. He we are at the end of the fourth quarter and we’re still waiting on the official figures for the third quarter. The CBI has just issued its latest forecasts though, and according to them, the UK will resume modest growth in the current quarter.
As we approach the end of another year, it’s worth reflecting on what has been a remarkable twelve months. We have seen a dramatic recovery in equity markets that began in March when the FTSE was standing below 3500. In a research note today, JP Morgan Chase & Co indicated that they are bullish about next year: ‘Equity markets should continue to rise next year, supported by low policy rates,’ wrote Jan Loeys, global head of market strategy.
