Once again, the FTSE 100 has run out of steam just as it threatened to finally top its all-time high of 6930, which it hit almost 15 years ago on Millennium Eve.
Oil and energy stocks are to blame, with BG Group, BP, Weir Group and Tullow Oil all flashing red in the wake of OPECs refusal to cut production.
So the FTSE 100s rocky year continues, knocking it back to 6675 at time of writing, roughly where it started in January. We should be grateful it wasnt worse, given all the problems afflicting the planet, including the eurozone, Ukraine, Islamic State and tremors in China.
Happily, all the shocks were soon shrugged off.
As we stagger into December, I still believe that markets could could end the year on a high. Black Friday has just fired the starting gun on the annual Christmas shopping frenzy, and theres still time the traditional Santa rally.
The problem is that Europe keeps trashing the party. Latest figures show Eurozone inflation downagain to just 0.3%, and thats before the latest drop in oil prices has been factored into the figures.
But that also gives European Central Bank president Mario Draghi yet another reason to do what he has wanted to do all along, give the region an unbridled blast of QE.
Hisrecent claim that the ECBs Governing Council is unanimous in its commitment to use other unconventional instruments, has fired rumours that it will finally launch a blitz of bond purchases at its next meeting on Thursday, December 4th.
If Draghi does deliver (and its still very much in the balance), then Santa will surely fly.
The FTSE 100 doesnt have to travel far to top this years 52-week high of 6878. A rise of 3% should do it. Breaking through the 7000 pain barrier would take a rise of nearly 5%, but who knows what could happen iftraders really get into the festive spirit?
At 15.5 times earnings, the index is at close to fair value, so a bumper rally is tricky to justify at todays prices, and given todays challenges. So dont get too carried away.
Although with the index currently yielding 3.47%, income seekers have a good reason to get stuck in.
New Year Blues?
Even if the Santa rally does come to town, the big question is whether the party can continue into January and beyond. Given all the uncertainty out there, that could be too much to ask for, even at Christmas.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.