G20 and US earnings set to be positive catalysts

AREVIVAL in hopes that the Eurozone crisis can and will be contained will continue to spur stocks higher this morning.

The mood of the market certainly seems to be leaning towards the positive, and that will likely be reinforced by news from Paris at the weekend that the G20 have agreed that the IMF should “consider new ways to provide on a case by case basis short-term liquidity to countries facing systemic shocks”.

The FTSE 100 index is called to open up around 50 points at 5,516. Germany’s DAX 30 index is expected to open up 61 points at 6,028, and the French CAC 40 is forecast to open higher by 30 points at 3,247.

Whilst Europe will inevitably continue to play its part with market direction, recent encouraging news from the US has also been responsible for the current boost in global stocks.

Retail sales data on Friday rose at their fastest pace in seven months, demonstrating how American consumers are shrugging off past concerns about global recession. A wave of big-name earnings due out this week could well help push the markets even higher, with the tone set by stellar results out from Google on Thursday. Companies due to report include Goldman Sachs, Bank of America, Morgan Stanley, IBM, Coca Cola and Apple.

Apple’s shares closed at a record high, and came within a whisker of the intraday lifetime high, on Friday at $422, with sales on the new iPhone 4S expected to reach between two and two and a half million units following the launch last Friday.

Further evidence that we could be in early year-end rally mode comes from the VIX volatility index, which closed 8 per cent lower, down for a remarkable ninth day in a row. Consistently lower levels on the VIX - the so-called “fear index”, are often regarded as heralding a period of increased risk appetite.

Martin Slaney is director of global product management at GFT