European stocks mixed on quadruple witching day

European stocks were largely mixed on Friday, with gains seen in resource shares in the UK, whilst French stocks lagged broader European trade. Today is quadruple witching day, when a multitude of futures and options contracts expire, and so this could trigger some added volatility into the trading session, along with some obscure price moves as prices settle for the various expiries.

By 10am the FTSE 100 had climbed 0.5%, whilst the DAX traded flat and the French CAC fell 0.2%, marking a somewhat mixed start to the trading session.

Much of the FTSE’s charge and outperformance of European Indices was thanks largely to strong support of mining stocks, with the FTSE 350 mining sector climbing 2% in early trade. The mining bounce induced demand for stocks such as Kazakhmys, Antofagasta and Fresnillo in early trade, with these stocks being the top 3 risers in London trade, rallying around 4%.

The weaker US dollar today is giving a beneficial lift to dollar denominated commodities such as Crude Oil and the price of Copper, which has seen a bounce. It is this bounce that has also encouraged higher demand for resource stocks today.

On the downside is shares of BSkyB, whose share price has fallen 1.6% as shareholders reacted to a downgrade of the firms share price by Bank of America/Merrill Lynch to neutral, from a previous stance of buy. The downgrade came as the bank cited cost and competition concerns triggering negative EPS momentum.

There is a lack of significant economic data out today apart from some sentiment data out of the US in the afternoon session, and so therefore, financial headlines out of the euro zone is likely to play a key role in the close to today’s session.

Historically this is the last real session before the bulk of investors take a leave of absence from the financial markets for the Christmas period and new year. As such, we could see a large amount of position settlement and investors readdress their portfolios for their intended leave of absence and year end.

The lower volumes are likely to exacerbate both rallies and bearish moves and so a degree of caution is warranted in today’s markets when assessing the true momentum and strength behind market moves.