The UK Index looks set to close flat today, with only small gains for the week. Whilst not exactly offering the excitement of recent weeks or that seen earlier in the year, there are a host of strong positives and hidden messages to be taken from such a calm move into the festive period. For example, we can’t ignore a potential 12 drivers of Christmas:

1. Closing the final session of the week positive is bullish. Investors are clearly prepared to hold onto risky positions over the festive break. Individual UK Index stocks still moved up to 5% this week; the index is but an aggregate of 100 names.
2. Closing the week with gains that extend an existing uptrend bodes well for continuation of said trend
3. This year’s December Santa Rally has clocked up healthy gains of 4.5%; an even more impressive 6.3% when taken from the lows of 4 Dec.
4. The UK Index is flirting with fresh December and 2-month highs, within touching distance of October 7130 all-time highs
5. A Trump-inspired rally is alive and well, investors itching for the Dow Jones to hit 20,000 (less than 100pts away)
6. Risk related to the key banking sector in Europe has been much reduced today with;
   1. A bailout agreed for Italian time-bond Monte dei Paschi and support for its troubled peers
   2. Deutsche Bank and Credit Suisse settling mis-selling cases with the US Department of Justice (DoJ)
7. Fears about China, having scuppered the start to 2016, have taken a back seat
8. OPEC and Non-OPEC have finally agreed to curb production to buoy oil prices
9. The US Federal Reserve has hiked rates again, strengthening the USD, but the world hasn’t ended
10. We are edging towards Brexit, and again, the world hasn’t ended
11. A weak Sterling (GBP) from Brexit, Trump and the Fed rate hike boosts the value of international UK Index profits
12. The trend is your friend……..at least until the bend at the end

So there are a host of reasons to remain positive about trading into the year-end and next year. The calmer moments may not necessarily offer the most exciting of moves, however, they do allow time to reflect and consider on both current and future positions without being forced into reacting to heavy newsflow and fast moving share prices. Sometime the quieter times prove the best. Don’t knock ‘em.

To keep abreast of the market trends and drivers right through the festive period get access to our research now to ensure you are in the best possible position for trading into 2017.

On behalf of Accendo Markets’ Sales, Trading and Research teams, I offer you our warmest wishes for Christmas and the New Year.

Mike van Dulken, Head of Research, 23 Dec