29.11.13 Friday Morning

A nuclear deal struck over the weekend between Iran and six world powers had an encouraging knock-on effect with the FTSE 100 being led higher by IAG, EasyJet & Carnival on expectations of lower fuel costs. Sanctions imposed against Iran in the past two years have slashed exports from the OPEC member by more than half, helping keep Brent above $100 a barrel despite weak global demand.

Meanwhile, U.S. equities have kicked on this week extending their incredible rally giving no relief to the bears hoping to see some weakness. Whilst valuations in the S&P 500 climbed 20 percent in 2013, the price-earnings ratio, at about 19, is significantly less than when stocks plunged in 2000 at 30. Add that to the fact that the Christmas period traditionally shows considerable strength, the likelihood of a “correction” seems more and more dubious.

Volumes have been light as the trading week draws to a close owing to the shutdown of U.S. markets as Americans around the world celebrate Thanksgiving. Whilst U.S indices remained closed all of yesterday, today will see the equities trade on a half day basis, opening up at the usual time and closing at 18:00 GMT.

Asian shares seem likely to end the month lower for the first time since August, trading 9.7 percent higher through 2013. Trading volumes have slumped in the past two months after prices surged 6.4 percent in September whilst the Asia-Pacific index continues to trade at 14 times estimated earnings, the highest since May.

More than $8 trillion has been added to the value of global equities this year, the biggest increase since 2009, after central banks took steps to shore up their respective economies. The markets have warmly received the anticipated appointment of Janet Yellen as new Head of the Federal Reserve, who is seen as a more dovish candidate than some of her rivals, pledging to maintain record bond purchases until data points towards a sustained and dependable recovery.

Additionally, the ECB have made similar claims to those of U.S policymakers, stressing a need to maintain stimulus as a means of navigating out of the financial crisis. The ECB, have pressed ahead with plans to maintain stimulus in the face of German criticism. This is a direct response to the ECB cutting interest rates to record lows this month and said it could take them lower still to prevent the euro zone recovery from stalling.

Meanwhile, the BoE are seemingly developing a slightly different strategy to the rest of Europe with winding down of stimulus potentially on the horizon. This comes after the pound rose to its strongest level since January as investors bet the changes to the Funding for Lending Scheme nudge the BOE toward an exit from extraordinary stimulus as the economy grows at its fastest pace in three years.

Britain’s 0.8 percent growth in the quarter through September was the quickest among the Group of Seven nations, according to the Organization for Economic Cooperation and Development. That compares with 0.3 percent in Germany and 0.1 percent in the euro area, Britain’s biggest trading partner.

Looking ahead to next week, Ben Bernanke is set to deliver his latest speech detailing the central banks immediate plans regarding monetary policy at 13:30 GMT next Monday. This will more than likely set the agenda for the rest of the week, and there is little doubt that markets will be range-bound during Monday morning trading as investors cautiously hold fire before the Fed chief delivers his speech.

Stock of the Week - BTG, +23.78%:
A breakthrough varicose vein treatment developed by British drug maker BTG has won approval in the US after a difficult decade in the making. The treatment, which BTG predicts could generate annual revenues of $500m (£309m) at its peak, is a foam injection which causes varicose veins to collapse without the use of surgery or lasers.

Monday –

• GBP – Manufacturing PMI @ 09:30
• USD – Fed Chairman Bernanke Speaks @ 13:30

Tuesday –

• AUD – Retail Sales m/m @ 00:30
• GBP – Construction PMI @ 09:30

Wednesday –

• AUD – GDP q/q @ 00:30
• GBP – Services PMI @ 09:30
• USD – ADP Non-Farm Employment Change @ 13:15
• CAD – Trade Balance @ 13:30
• USD – Trade Balance @ 13:30
• USD – ISM Non-Manufacturing PMI @ 15:00
• USD – New Home Sales @ 15:00

Thursday –

• AUD – Trade Balance @ 00:30
• GBP – Asset Purchase Facility @ 12:00
• GBP – Offical Bank Rate @ 12:00
• EUR – Minimum Bid Rate @ 12:45
• EUR – ECB Press Conference @ 13:30
• USD – Prelim GDP q/q @ 13:30
• USD – Unemployment Claims @ 13:30

Friday –

• CAD – Employment Change @ 13:30
• USD – Non Farm Employment Change @ 13:30
• USD – Unemployment Rate @ 13:30
• USD – Prelim UoM Consumer Sentiment