To add to the exciting opportunities in the equities space this week, we also point out that their gains have contributed and helped extend the rebound in the UK’s UK Index Index to an impressive 11%. More significant for investors, however, is the index finally delivering a meaningful break-out from a bugbear 3-month downtrend. This has quite rightly got those of a bullish persuasion very excited. As if they weren’t smiling enough already, after such a strong bounce from 3.5yr lows. The prospect of a return to late 2104 highs 6450, overcoming what has been a roller-coaster start to the year is simply music to their ears.

January may have seen an 11% decline in just 3 weeks, but a 9% recovery into month-end almost put the bulls back in control. And now, February’s 10% declines into mid-month have almost been fully eclipsed as we move towards the new month of March. We have seen multiple opportunities to trade the channel range, with moves of 10% up and down (don’t forget you can trade short too). Just what our clients have been looking for. In fact, were we to revisit early December highs of 6450, this would mean that those who haven’t been on-board the preceding move haven’t missed the boat entirely. Sure, we’ve had a 10% move higher, but there’s potential for another 6% upside if the rally has legs.

What could get us there? A rising tide of risk appetite could see all boats lifted, with more central bank monetary stimulus a potential driver. Or it could be that the traditional index heavyweights (banks, financials, miners, oil) are set to recover from multi-year lows following much concern surrounding a low oil price and the effect of the likes of negative interest rates and increased regulatory burden. Which do you see it being? Unsure? Sign up to our research and let me help you understand what’s driving the markets daily, allowing you form your own opinion about where we could be headed next.

Mike van Dulken, Head of Research, 26 Feb