Equity markets buoyed by positive US data and fears of contagion easing in the Middle East

<p>Overnight markets in the US traded higher following decent manufacturing data and fourth quarter updates from Pfizer, the US pharmaceutical giant, and UPS, the parcel […]</p>

Overnight markets in the US traded higher following decent manufacturing data and fourth quarter updates from Pfizer, the US pharmaceutical giant, and UPS, the parcel delivery company; both helping US markets close above psychologically important levels of 12,000 for the Dow and 1300 for the S&P.

The strong US close helped equity markets across Europe start the day in a positive fashion, with the FTSE 100 posting a +1% gain by 9am GMT, with a high of 6020 (+62 points). Also in positive territory at 9am GMT were the DAX +18 points at 7202, the CAC40 +5 points at 4078 and the FTSE MIB Index +79 points at 22604. The FTSE seems to be outperforming other European indices this morning, this is probably due to it being hit harder than most in the last week or so due to it being heavily weighted by financial and mining stocks.

UK equity markets were again driven higher by the mining sector, with Rio Tinto, Xstrata, BHP Billiton, Anglo American, Lonmin and Eurasian Natural Resources all posting +2.5% gains in early trading.

Also helping the FTSE to trade up to 6020 was Imperial Tobacco; the world’s fourth-largest cigarette maker traded sharply higher following an increase in sales and a pledge to boost its dividend. The update was warmly received by investors and Imperial Tobacco traded up to a high of 1890p, +96p or +5.3%.

Unrest in Egypt has eased somewhat, giving investors a much needed confidence boost as well as an increase in risk appetite during this morning and yesterday’s trading sessions, giving wind to the sails of the UK index. Add that to yesterday’s positive macro data and it’s easy to see why the FTSE, at 9am GMT, has added 158 points or +2.7% since Monday evening’s close. With the situation in the Middle East placated for now, signs of a rebound in the world economy and a seemingly endless reel of better than expected updates, it would seem this rally is here to stay.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.