Risk appetite dominating the markets

Better than expected economic and company result data from the US have driven most worldwide stock markets to record highs with the S&P 500 in New York and the DAX in Frankfurt hitting all time record highs and the FTSE100 index hitting an 8 month high.

This despite the latest mortgage lending data from the Council for Mortgage Lenders (CML) in the UK reporting a small drop in mortgages in November with the number of loans decreasing by 1% or 60,000 and their value was off by 2.1% to £9.4 billion.

Paul Smee, Director General of CML said "The Bank of England's credit survey reported demand in the final quarter of 2013 for house purchases was rising at its fastest pace since the survey began in 2007. This is a significant shift in public mood and, with strong November lending continuing the year-on-year growth seen since April 2013, this should be expected to continue into the New Year."

In the US, the Federal Reserve Bank of New York’s regional manufacturing gauge rose to 12.51 points in January, way above the 3.5 expected by most analysts and now stands at its highest level since May 2012.

Meanwhile, Chicago Fed President Charles Evans said yesterday that he expects the US jobless rate to fall to 6% or lower by the end of 2015 while reiterating the Fed’s intention to maintain interest rates low even after the 6.5% mark is reached.

The improving outlook for the US economy boosted the US dollar which registered gains against the large majority of its currency peers.