According to London Capital Group
The UK share-index finished 2017 with a record high and looks set to start 2018 in a similar manner. The positive data out of China means miners could be topping the table in early trading. The out-performance of the heavily weighted mining sector was one reason alongside currency-weakness that propelled the UK benchmark higher last year. Traders will be looking for clues where big money will park funds for 2018 in the first few days of January. We think the price breakout in UK blue-chip stocks means momentum will be in their corner for the opening quarter of 2018.
Election worry to mean a soggy start in Europe
European equity benchmarks look set for a lower open on Tuesday. The announcement that a national election will take place in Italy on March 4 sent Italian bond yields higher and is contributing to the weakness of European shares. After the best year since 2013, election-risk means investors may be slow to get back on the wagon of European shares. Overall, we sense the risk to markets surrounding Italian elections has come down. Populists made inroads in 2017 but failed to clinch victory. The election success of Emmanuel Macron as well as the UK stepping aside has given rise to some optimism that 2018 could be the year that the EU makes a bigger push for closer integration.
China set the tone for a day of manufacturing data with a positive reading on the Caixin manufacturing PMI. The data came in ahead of expectations at 51.7, well above the 50.6 expected and pushing activity in the Chinese manufacturing sector well into expansion territory. The evidence of continued demand from heavy industry in China helped give industrial metal prices a positive start to 2018. The industrial data from China lends weight to the idea that the somewhat unexpected global growth rebound that underscored 2017 will continue into 2018.
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