City Watch: Brian Tora on why share prices are remaining resilient

LAST week was dull-ish, with markets drifting back a little. Given the news that accumulated during the week, we should be thankful that shares held as firm as they did.

Perhaps it has been the underlying belief that merger and acquisition activity is simmering below the surface that is keeping investors committed.

Certainly, yesterday saw plenty on that front. The on/off merger between Glencore and Xstrata went into “on” mode again, while William Hill also looked like consolidating the betting industry further. And then there’s the proposed merger between BAE and EADS to create a rival to Boeing in the aerospace industry. Investment banks must think it’s Christmas.

Europe, despite being centre stage last week with the report on Spanish banks and that country’s latest budget, is drifting out of the headlines, though yesterday’s jobless news was hardly encouraging.

Company results are sparse, though we will have both rail and bus operator FirstGroup and Wolseley the plumbers’ merchant reporting today, while both Tesco and Sainsbury deliver figures tomorrow.

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On the economic front, perhaps the most important event of the week will be Thursday’s interest rate decision from the Bank of England – not that anyone is expecting a change. And we have Nationwide’s latest take on UK house prices today.

Quite what all this will mean for investors is hard to determine. My reading recently has seen many opposing views on what the future might hold for markets, which I take as an encouraging sign. We remain vulnerable to events, though, with plenty of geo-political upsets possible.

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: : Brian Tora is an associate with investment managers JM Finn & Co.

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