New Year has positive start with surge on stocks

Stocks have begun 2010 with a bullish surge, and even after Friday’s employment data from the US revealed a surprising drop for December, we should see a broad appetite for risk get us off to a positive start to this week.

GFT is calling the UK’s FTSE 100 index to open up 11 points at 5,545 – within a whisker of the 52-week high of 5,552 set just last week. The German DAX is quoted around 6,051, up 14 points from Friday and the French CAC is seen opening up 12 points at the 4,057 level.

That stocks appear for now at least to have shrugged off that disappointing nonfarm payrolls number is significant, with market mood clearly focussed more on the positive, which in this case was the news that November’s data were actually revised higher to show a net gain in jobs.
Already one can sense a feeling of anticipation ahead of next month’s payrolls data, with hopes building that we will see a similar revision for December.

Looking further into the week ahead, we have the start of the US corporate earnings season to keep us on our toes, with Alcoa, Intel and JP Morgan the blue chips in the spotlight.

This week the news on the corporate and economic fronts is overall expected to be positive. Intel and JP Morgan are forecast to show a massive leap in profits from this quarter a year ago. On Thursday, US retail sales data should benefit from the Christmas rush, and consumer sentiment is out on Friday which is also expected to post a modest gain in a reading of 74, compared to 72.5 in December and 67.4 in November.

On that basis we foresee a broadly bullish tone to the week but the risk is to the down side, so watch out for unexpectedly negative news.

Martin Slaney is director of global dealing operations at GFT.