Remarkable week for FTSE 100

Well, who'd have thought it? A week after the terrorist attacks in Paris were predicted to cause mayhem on global stockmarkets, leading indices are all sharply higher. Even the French Cac index is up over 100 points. But things are about to get even more interesting, as the runaway FTSE 100 homes in on a major level of resistance.

This week's five-day winning streak - over 260 points, or 4% as I write - to a 10-day high is quite remarkable in the circumstances. And the best performers have been those subjected to heavy selling since the market peaked in April.

Leading the pack this week are auto catalysts giant and now special dividend payer Johnson Matthey, the Smiths Group conglomerate, Royal Mail and BAE Systems.

Rolls-Royce, too, has attracted attention from bargain hunters. Trading updates have given reason to believe that at least the first four were oversold. The jury is still out on Rolls.

But at 6,346, the FTSE 100 is just one good session away from 6,400. This is significant because it represents a major level of technical resistance, according to chartists. Break above this magic figure and there's "free air between that point and 6,800", Alistair Strang at Trends and Targets tells us: "Who knows, maybe a decent December is possible!"

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Clearly, the 380-point slump between Bonfire Night and Friday, 13 November to a six-week low presented a short-term buying opportunity for canny investors. 

And minutes from the Federal Reserve's 27-28 October policy meeting, published 7pm GMT Wednesday, certainly soothed concerns about a possible first US interest rate hike in almost 10 years next month.

And last night, Atlanta Fed President Dennis Lockhart repeated his view that the Fed is ready to raise borrowing costs at the 16 December meeting, but said "the pace of increases may be somewhat slow and possibly more halting than historic episodes of rising rates".

That's what the market wants to hear. The fear is not so much that the US is about to begin a rate hike cycle, rather the pace of monetary tightening. In fact, the Fed's vice-chairman Stanley Fischer said "several emerging market (and other) central bankers have, for some time, been telling the Fed to just do it". It looks like they will in four weeks' time.

In the absence of any further shocks, and with a wall of money said to be waiting for an opportunity to invest in shares, the Santa rally "proper" looks more likely now than it did five days ago.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.