Daily Market Commentary: (Evening Report)
FTSE 100 breaks 6,000 after US budget deal
Market Movers
techMARK 2,150.87 +1.97%
FTSE 100 6,027.37 +2.20%
FTSE 250 12,611.85 +1.91%
Market Movers
techMARK 2,150.87 +1.97%
FTSE 100 6,027.37 +2.20%
FTSE 250 12,611.85 +1.91%
The FTSE 100 surged past the psychologically-important level of 6,000 on Wednesday as stock markets across the globe celebrated the last-minute deal by US politicians to avert the fiscal cliff.
While the budget saga Stateside is far from over - talks over spending cuts go on while concerns over the government’s debt ceiling have resurfaced - the House of Representatives passed a Senate-backed bill in the early hours of Tuesday morning to stop massive tax rises and spending cuts, by 257 votes to 167. A day before it had cleared the Senate by a majority of 89 votes to 8.
The fiscal cliff - scheduled tax rises of around $536bn and spending cuts of $109bn - was widely expected to throw the US economy back into recession if politicians couldn't break months of impasse.
Major benchmark indices across Europe finished today’s session up 2-3%, while markets on Wall Street opened around 2% higher. London’s blue-chip index gained 130 points, or 2.2%, to finish at 6,027. The last time the Footsie closed higher was at the end of April 2011. Nevertheless, the largest technical hurdle will come in towards the 6,100 point level, according to analysts at Digital Look.
"Immense New Year relief rally for global financial markets following the passage of a bill in the US to avert the full force of the fiscal cliff," said market strategist Ishaq Siddiqi from ETX Capital.
"2013 has kicked off with a bang with bulls in full control of price-action – the risk rally sees all your traditional investments in vogue (stocks EUROSTOXX making 16-month high, euro, commodities, peripheral bond yields, banks, miners et al) while core government bonds and US Treasuries take a beating."
Gains on stock markets were cemented in afternoon trade following a series of upbeat manufacturing figures. Manufacturing purchasing managers’ indices (PMIs) in the UK, Italy and US managed to beat expectations today, though the Eurozone PMI number missed forecasts slightly.
While the budget saga Stateside is far from over - talks over spending cuts go on while concerns over the government’s debt ceiling have resurfaced - the House of Representatives passed a Senate-backed bill in the early hours of Tuesday morning to stop massive tax rises and spending cuts, by 257 votes to 167. A day before it had cleared the Senate by a majority of 89 votes to 8.
The fiscal cliff - scheduled tax rises of around $536bn and spending cuts of $109bn - was widely expected to throw the US economy back into recession if politicians couldn't break months of impasse.
Major benchmark indices across Europe finished today’s session up 2-3%, while markets on Wall Street opened around 2% higher. London’s blue-chip index gained 130 points, or 2.2%, to finish at 6,027. The last time the Footsie closed higher was at the end of April 2011. Nevertheless, the largest technical hurdle will come in towards the 6,100 point level, according to analysts at Digital Look.
"Immense New Year relief rally for global financial markets following the passage of a bill in the US to avert the full force of the fiscal cliff," said market strategist Ishaq Siddiqi from ETX Capital.
"2013 has kicked off with a bang with bulls in full control of price-action – the risk rally sees all your traditional investments in vogue (stocks EUROSTOXX making 16-month high, euro, commodities, peripheral bond yields, banks, miners et al) while core government bonds and US Treasuries take a beating."
Gains on stock markets were cemented in afternoon trade following a series of upbeat manufacturing figures. Manufacturing purchasing managers’ indices (PMIs) in the UK, Italy and US managed to beat expectations today, though the Eurozone PMI number missed forecasts slightly.
Europe Market Report
Stocks at 19-month high after US budget deal
FTSE 100: 2.13%
Dax-30: 2.15%
Cac-40: 2.37%
FTSE Mibtel 30: 3.81%
Ibex 35: 3.12%
Stoxx 600: 1.97%
FTSE 100: 2.13%
Dax-30: 2.15%
Cac-40: 2.37%
FTSE Mibtel 30: 3.81%
Ibex 35: 3.12%
Stoxx 600: 1.97%
European equities rocketed to a 19-month high Wednesday after the US breathed a sigh of relief as they reached a budget deal.
Lawmakers passed a bill Tuesday that avoided most tax hikes and postponed spending cuts by raising taxes for higher earners.
The legislation brought an end to a year-long impasse over how to avert the so-called fiscal cliff. President Barack Obama will sign off the bill after the House voted 257-167.
"Thanks to the votes of Democrats and Republicans in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America," he said in a press conference.
However, the bill has left a number of problems unresolved with some strategists saying it was merely a short-term fix which did nothing to prevent future budget conflicts.
Lawmakers passed a bill Tuesday that avoided most tax hikes and postponed spending cuts by raising taxes for higher earners.
The legislation brought an end to a year-long impasse over how to avert the so-called fiscal cliff. President Barack Obama will sign off the bill after the House voted 257-167.
"Thanks to the votes of Democrats and Republicans in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America," he said in a press conference.
However, the bill has left a number of problems unresolved with some strategists saying it was merely a short-term fix which did nothing to prevent future budget conflicts.
Swedish regulator cracks down on traders
The Swedish Financial Supervisory Authority will step up pressure on traders who break rules that require them to report company bond prices.
The watchdog will crack down on corporate debt traders to abide by existing rules in a bid to improve transparency in a growing market.
Traders will have to file trade reports including volumes and closing prices no later than 9:00 the following day. The krona strengthened 0.23% at 6.4877 to the dollar at 16:30 Wednesday.
The watchdog will crack down on corporate debt traders to abide by existing rules in a bid to improve transparency in a growing market.
Traders will have to file trade reports including volumes and closing prices no later than 9:00 the following day. The krona strengthened 0.23% at 6.4877 to the dollar at 16:30 Wednesday.
The euro dropped 0.07% to the 1.3195 dollar despite a positive start to the day. Front month Brent crude futures increased 1.130 to 112.370 on the ICE.
US Market Report
After moving sharply higher at the start of trading, stocks have continued to perform well over the course of morning trading on Wednesday. The major averages have not seen much follow-through on their initial upward moves but remain firmly positive.
The rally on Wall Street comes as traders breathe a sigh of relief after both the House and the Senate approved legislation that allows the U.S. to avoid the fiscal cliff.
The agreement calls for the expiration of the Bush-era tax rates for individuals earning more than $400,000 and households earning more than $450,000. Payroll taxes and taxes on capital gains and dividends also go up under the agreement, which also extends unemployment benefits.
Meanwhile, the legislation delays the automatic spending cuts that were due to go into effect for two months, meaning that there are future budget negotiations ahead.
With the news eliminating some of the uncertainty about the outlook for the economy, steel stocks have moved substantially higher on the day. The NYSE Arca Steel Index is up by 3.5 percent after reaching its best intraday level in eight months.
Semiconductor stocks are also seeing considerable strength, with the Philadelphia SemiconductorIndex up by 3.1 percent. Earlier in the session, the index reached a three-month intraday high.
Most of the other major sectors have also shown strong moves to the upside, with housing, biotechnology, railroad, and telecom stocks posting standout gains.
The major averages have moved roughly sideways in recent trading, holding on to strong gains. The Dowis up 249.23 points or 1.9 percent at 13,353.37, the Nasdaq is up 71.70 points or 2.4 percent at 3,091.21 and the S&P 500 is up 27.00 points or 1.9 percent at 1.453.19.
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