December 27, most traders and investors are still on Christmas holidays. Today, the first day of trading week after Christmas, European markets traded in neutral, although technically indexes are located the green. Stable oil is likely to support the European investors. However, one should not expect significant trading today- as trading activity is extremely low. London Stock Exchange remains closed.
Italian banks concerns and Banca Monte dei Paschi di Siena in particular are in the spotlight. On Monday, member of the European Central Bank Governing Council, Jens Weidmann said that the European Union must approve the plans for government aid to Italian banks, in order to comply with EU aid rules.
Deficit estimates of Banca Monte dei Paschi di Siena SpA rose to 8.8 billion euros, after the Italian Government announced a bank rescue, last week. Prior to that, analysts estimated the amount of aid to EUR 5 billion. The big difference in the figures is the new investors' concerns and would require additional funds from the Government.
On Friday, the Italian government announced a plan to rescue the Monte dei Paschi di Siena SpA, using budget funds. However, the program has not received formal approval by the EU. US futures are also neutral pointing to a flat Wall Street start
On the FOREX market, trading activity in the first half of the day is low as trading volume is not enough to bring instrument out of the current ranges. Currencies are traded in narrow Friday ranges. The US dollar still looks strong. The oil market is stable. Brent starts a new week confidently at balance level of $ 55 per barrel.
On Friday, US markets ended the day with a slight gain, amid higher oil prices and low pre-holiday volumes. Last week, the Christmas rally in US and European markets gradually turned into profit-taking and consolidation before the long weekend. We believe that this week, investors will remain optimistic and will try to keep the market at close to maximum levels. The main positive drivers are elected US president stimulating action, strong oil and positive statistic data. However, emerging markets continue to trade in close proximity to historic lows as the capital outflow intensify. The US currency gained to 14 year highs, and we expect the dollar to continue gaining in the next year- strong GDP reinforces expectations of a sharp interest rate hike in line with the Fed's statement. Today US consumer confidence data in the focus.