Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

  UK 100 called to open -5pts at 6670, having made it as far as 6680 yesterday and delivering a Santa Rally of 4.5% from last week’s low. It also finally takes December into positive territory with market participants still seemingly having fun playing with the early ‘taper toy’ present delivered last week by a certain bearded figure.

 Nonetheless, advances by futures have slowed up since equities closed yesterday and volumes have continued to thin out) and expectations are for a fairly muted pre-Christmas session, with most of Europe’s bourses closed and the UK and US only open for a half-day, as well as the UK suffering infrastructure disruption after another storm.

Note European and US markets closed higher yesterday after US macro data showed US personal income a touch lower than the consensus rebound but, in a sign of consumer confidence, spending was in-line, although the Fed’s favourite measure of inflation PCE core (Personal Consumption Expenditure) was unchanged from October, missing consensus.

Uni of Michigan consumer confidence missed forecasts but was unchanged from the preliminary 5-month-high reading, while the Chicago Nat Activity index rebounded much more strongly. All in all, bar the inflationary miss, it would appear US data remains supportive of tapering.

Asian equities positive overnight, helped by news this morning of intervention by the PBOC to ease year-end cash crunch concerns and reassure markets that it wants avoid any worsening of the situation. Hong Kong rebounded on the China news, while Japan and Australia continue to be buoyed by optimism over US growth following the Fed’s taper.

In focus today on the data front we have French GDP which is seen confirmed as still recessionary on Q3 and highlighting the North/North divide that may be developing alongside the existing North/South. UK BBA Home loans will be of interest given the significance of the UK housing market recovery.

In the afternoon, the US Durable Goods Orders are expected to have rebounded strongly in November (both headline and ex-transport), while housing data is forecast to show continue growth.

 Given that we will not now write until Friday 27Dec, we point to data in the intervening period which could sway sentiment including Japanese PMI Manufacturing and BoJ Minutes on 25 Dec, followed by US Jobless Claims, Japanese CPI and Industrial Production and Retail sales on 26 Dec.

 The UK 100 looks to be taking a little breather after its strong gains from early last week and breakout well beyond the falling highs from end-October. Still facing north, although a small correction wouldn’t be anything out of the ordinary after 4.5% gains. Santa Rally still in force and December now in positive territory. Long-term rising trend back on course?

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Minera and Rio agree terms for Ollachea payment
• M&C to buy Chelsea hotel for 65 mln pounds
• Albemarle & Bond says Better Capital withdraws from sale process
• Helical Bar secures new 100 mln stg debt facility
• Tullow says Mantra well in Norway fails to find oil
• SEGRO says completes disposal of Frankfurt site
• British Land and GIC sign Broadgate deal