Strong data should keep stocks heading higher

AFTER their biggest weekly gain for six months, European stocks could well press even further ahead on this morning’s open.

In out-of-hours trading, GFT is forecasting the UK’s FTSE 100 index to open up 12 points from Friday’s close at 5,912. The German DAX is quoted to open up 14 points at 6,960 and the French CAC up 10 points at 3,982.

The Dow finished the week up 50 points on Friday, up over 360 points for the week, and that is set to support the current momentum for European markets today.

The fact that the rally has come despite no clear-cut resolution to the unrest in Libya nor the Japanese nuclear crises tells a cold but clear story: the sell-off which took stocks to their lowest levels since July 2010 was an over-reaction, a classic panic sell.

Instead, at least for now, focus is now firmly back on economics and global growth.

With that backdrop, the coming few days could see some sharp moves in stock markets given the heavyweight economic data due to be released.

Yes, it’s non-farm payrolls week again, where markets globally sit up and take notice of the US employment numbers.

A big number is the call – consensus is for a rise of over 200,000 jobs in March – and that is how traders are positioning their books, so the risk is to the down side. Ahead of those on Friday, get ready for US consumer confidence out tomorrow and ADP private payrolls data on Wednesday.

In Europe, the other headline market mover will be Portugal; although the markets have all but fully priced-in an eventual bailout by the EU the debt-ridden country still faces much political uncertainty before that looks like becoming a reality.

Martin Slaney is director of GFT's global dealing operations