Greater London, England -- (SBWIRE) -- 12/13/2010 -- CFD trading expert Giles Watts, Head of Equities at City Index (http://www.cityindex.co.uk), looks at equity market activity relating to President Obama’s tax stance:
“UK equity markets were heading for highs not seen since mid November after a strong morning session was consolidated by news from President Obama regarding US tax breaks. President Obama announced that tax cuts put in place during the Bush-era will remain for another two years, renewing tax cuts for both the middle class and wealthy high earners, the latter being slightly unexpected.
Deemed as a compromise by Obama and a victory for Republicans the market seemed in buoyant mood and continued its bullish tone from this morning’s session based on expectations of continued tax-breaks on dividends and capital gains.
UK equity markets were driven higher during the morning session by strong retail and mining sectors. The retail sector was in positive mood following a strong sales update by Tesco. The UK retail giant confirmed that sales in the run up to Christmas were ahead of expectations and posted a high of 430.75p up +10.75p, with sector stable mate J.Sainsbury’s posting a high of 377.2p up +19.7p.
The UK mining sector was in resilient mood again today on the back of strong commodity prices, namely copper and crude oil. Antofagasta, the copper producer, posted a high of 375p (up +13.3p). Other strong stocks in the sector were Eurasian Natural Resources with a high of 961.5p (+48.5p) and Kazakhmys with a high of 1595p (+71p).
Another contender for biggest gainer on the day was Unilever posting a high of 1936p (+83p) following an upgrade by Morgan Stanley to overweight from underweight, citing a slight yet encouraging change to its growth strategy.
The FTSE 100 posted a high of 5850 (up around 85pts) and nearing pre-European debt worry levels. Barring any unexpected poor macro data from either side of the pond this week the rally could well be here to stay. With Ireland’s banking woes seemingly dealt with for now, and a vote of confidence for Spain and Portugal by European officials, the bulls appear to be taking charge of European equities once again and this bodes well for the historical trend of a santa rally.”
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