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Political developments in Europe propel markets higher

Some evidence of European political progress was welcomed by the market this morning. Italy’s senate undertook a debate over the austerity measures demanded by the EU, and images of the elaborate swearing in ceremony of the new Greek prime minister reached viewers globally. It wasn’t long before the major indices found themselves up by around one percentage point.

Momentum continued throughout the day, Italy’s approval of the 2012 budget, which would cut Italy’s debt of €1.9 trillion and pave the way for a new government, helped to propel equities. A boost was also given by a strong US open, 2% gains on the major indices driven in part by the results of a University of Michigan Sentiment indicator for November, which came in ahead of expectations.

Schroders was the most significant gainer on FTSE 100, upgraded from sell to hold by Deutsche Bank, maintaining its price target of 1350p. UBS nudged their price target down on the stock, although the 30p reduction still resulted in a price objective of 1400p. The shares finished the day 6.8% higher at 1393p. Other strong gainers were the banking stocks, the troubled three of Lloyds, RBS and Barclays all put on more than 5%.

There were very few stocks losing ground on the FTSE, which finished the day 1.85% higher, better by 100 points at 5545. In what has become to be known as a typical “risk-on” day, the French CAC and German DAX saw gains close to and above 3% (respectively), and money fled the dollar’s safe haven status leaving the greenback around 1.3% lower against the euro. Italian bond yields retreated dramatically to roughly 6.5%, as commodities generally put on gains.

This was posted in Bdaily's Members' News section by John Dance .