The FTSE 100 surged to 6113 as London started trading in thin liquidity conditions before Christmas holidays. Thin volumes and choppy price action are expected to be on the agenda this week, even more when the sentiment has been mostly negative during the entire second half of 2015. Falling energy and commodity prices, global economic slowdown led by China tumbling, additional monetary easing measures from the ECB, the RBNZ and the BoJ and finally the Fed rate hike last week gave a decent squeeze to global financial markets. A choppy end of year is therefore little surprising.
The miners lead gains in London as the commodity prices opened the week in the green. Glencore (L:GLEN) (+5.61%) and Anglo American (L:AAL) (+5.11%) are again among the top performers in London as iron ore surged 3.67%, while copper consolidated gains above $2.10/lb after last week’s bounce off the $2.03/lb low. Gains in miner stocks are brittle as the broader picture remains muddy. We have often watched miners shifting from top gainers top losers in a short period of time over the past couple of months.
ITV (L:ITV) is among the front-runners this Monday on talks that Comcast’s NBCUniversal met ITV executives for preliminary talks. ITV shares rallied to 275p, a stone’s throw lower than the all-time high of 281.90p. ITV has ranked among the best performers of the FTSE in 2015, a year of hectic and mostly bearish market. The second half has certainly been prosper for business, thanks to Rugby World Cup that has helped tackling the falling viewership and should help ITV printing a better-than-expected full-year performance. The 22% surge in online, pay and interactive in 3Q is also promising despite the stagnating core viewership and advertisement revenues. There is potential for further expansion with a 12-month price target set to 287p. Liberty Global (O:LBTYA) and Sky are already shareholders in ITV and the growth potential is appealing for other companies to join the stream.
Oil prices continue sliding to fresh multi-year lows. Azerbaijan abandoned currency peg on falling oil prices, the Azerbaijani manat lost 50%. The combination of an oversupplied market and a soft global demand appears to be favourable of further downside. Given the weighty downside risks form a fundamental perspective, the corrective upside attempts in the oil market gather little traction. Although technical indicators point at oversold market conditions (RSI 29%), the path appears to be well paved for a further slide toward the seven-year dip of $32.40 on the radar.
The pound is presently sitting on the mid-term support of 1.4888 (minor 76.4% retrace on Apr-Jun rise) and eyes shift to the next critical level, 1.4566 (April low). The divergent policy outlook between the Fed, the ECB and the BoE is expected to cap the upside appetite in Cable, while against the EUR we may have reached a local top pre-0.73.