European markets continue bullish start to 2010
Joshua Raymond, Market Strategist at City Index commented: "European markets continued their bullish start to 2010 by posting another day of gains with the FTSE 100 reaching a new 16 month high and the DAX hitting a new 15 month high.
Investors are still feeling bullish as we continue into the New Year on the back of terrific gains in 2009 and with little action expected from the Bank of England with regards to Interest Rates on Thursday, there is a degree of confidence that Friday's Non Farm Payrolls will continue to show a recovery in the US labour market.
We have had some fairly poor Pending Home Sales figures out of the US today which threatened to throw a spanner in the works, but the fact that this was largely shrugged off by investors shows the strength of the confidence they are feeling now.
5500 level surpassed
We have firmly broken through the 5500 level on the FTSE 100 and if we can hold onto these gains over the next few weeks, investors may start to target the 5650 level sooner rather than later. Break 5650 and there may be little to hold the FTSE back from an attack on the 6000 level again in the near future.
Banks lead
The banking sector has been in high demand today with Royal Bank of Scotland, Barclays and Lloyds all leading the winners list in London. RBS has been in much demand for the last 48 hours, kicked off by a positive note from BNP Paribas yesterday, and continued speculation that they or Lloyds may sell a stake to Itau Unibanco.
Barclay's shares have also been incredibly busy today with the amount of shares switching hands far superseding their daily average following speculation that they may lift their outlook and with Deutsche Bank highlighting the bank as one of its top picks for the year.
Cadbury
Cadbury shares tumbled over 3% to a new month low after Warren Buffet's Berkshire Hathaway Inc voted no to Kraft's proposal to authorise issuance of up to 370 million shares to help facilitate the Cadbury deal. This was a stark rejection from Mr Buffett, a man with great influence, and it could put a big spanner in the works as to whether a deal could be done, particularly with it looking like Kraft may need to significantly up its offer for any bid to succeed.
The news immediately sent Cadbury shares diving and we saw a rush of investors calling in to get out of their Cadbury positions. However, we did see later on in the afternoon session some bargain hunters come in to lift share prices from their lows speculating that a deal could still be done after Berkshire stated they could change their vote over to ‘yes' over the next few weeks if they see value for shareholders."