Asian Spread Betting Markets Fall on Comments by Chinese Premier
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 14 September 2011: 11.00am Update
The FTSE 100 managed a modest advance this morning, but continuing worries about Greece and the rest of the Eurozone meant that the leading index was unable to make further progress.
The FTSE 250 lagged behind, as yet more bad news emerged on UK employment.
By 10.30am (London time), the FTSE 100 spread betting market was 0.64% higher at 5207.42, and the FTSE 250 had risen 0.4% to 10,005.11.
Greek tragedy rumbles on
The theme of the week has been, and remains, the Eurozone and especially Greece. A downgrade of French banks by Moody's had been a lingering possibility all week, and today the ratings agency moved to cut the credit rating of two out of three of the banks.
Crédit Agricole and Société Générale were both cut by one notch, to C and Aa3 respectively, but Moody's extended its review on BNP Paribas, saying that it was still assessing the impact of funding difficulties on the bank.
Market reaction was fairly muted, since the downgrades had been widely expected, and the moves only put Moody's ratings on a similar level to those of the other ratings agencies.
Meanwhile, China, which was supposed to be this week's white knight with its purchases of Italian debt, hit out at the Eurozone, with Premier Wen Jiabao saying that countries must 'put their own house in order'.
He added that China was willing to help out its biggest trading partner, the Eurozone, but that leaders must take firm action.
President Obama echoed his words as he too called for co-ordinated action. We have been waiting for just such 'co-ordinated action' for over a year now, and still no real plan has emerged.
The big hope of the day is the conference call between Greek PM George Papandreou and his paymasters in Paris and Berlin, Nicolas Sarkozy and Angela Merkel. They kept everyone on edge yesterday with a 'will they, won't they' game of expectations about a possible announcement.
However, as many have pointed out, the telephone call is unlikely to produce any meaningful results other than words of support for Greece and calls for Athens to deliver on its promises to cut its deficit.
UK unemployment rises again
UK unemployment saw its largest increase in two years, according to the Office for National Statistics.
The number of people out of work was up by 80,000 to 2.51 million for the three months to July, with the unemployment rate now at 7.9%.
There was an increase of 20,300 in August for the number of people claiming Jobseeker's Allowance.
Sterling dropped slightly against the US Dollar, as the figures underlined the continuing weak state of the UK economy. Such data will strengthen the hand of those calling for more monetary stimulus for the UK economy, but is unlikely to prompt a major shift in Bank of England policy just yet.
Next looks toward a bright 2012
One of the major gainers this morning was clothing retailer Next, which rose 6.3% to 2482p after unveiling good half-year results.
Although sales were down at the UK retail division, the internet business and international sales both saw strong growth.
Like all retailers, Next has struggled as a result of the bleak consumer environment in the UK, and the firm said that 2012 should see an easing of pressure on British shoppers.
Next's results helped lift other retailers, with Mothercare up 2.8% and Supergroup rising 2.2%.
US pre-market open
US December futures are pointing to a poor start for Wall Street, with Dow futures down 0.2% and S&P 500 futures 0.5% lower.
US retail sales for August are published at 1.30pm (London time), and are forecast to show an increase of 0.2% for the month. Also out today is PPI data for August and July business inventory figures.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above comments do not constitute investment advice and neither IG Index nor SpreadBets.org.uk accept any responsibility for any use that may be made of them.
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Spread Betting 14 September 2011: 6.15am Update
It was another quiet night of trade in US markets overnight as the major indices all managed modest gains, with speculation that China and other BRIC nations will look to purchase European debt.
High levels of caution still remain, however, as the fundamentals of the situation have not changed.
The NASDAQ was the top performer, rising 1.5%, while the broad-based S&P 500 and Dow Jones Industrial Average added 0.9% and 0.4% respectively.
Asia & Australia
Across Asia, regional spread betting markets are all trading lower as earlier signs of strength faded following comments from Chinese Premier Wen Jiabao.
Premier Wen said that China will look to help Europe through its current crisis but noted that Western nations must do more to solve the debt crisis and to protect foreign investors.
He also urged the EU to grant China the status of a full market economy before the WTO does in 2016.
The Kospi is the worst performer, down 3%, while the Nikkei 225, Hang Seng and Shanghai Composite are all weaker between 0.5% and 1.3%.
In Australia, the ASX 200 has faded in line with regional markets. After hitting an early high of 4110, the sellers moved in, pushing it to recent lows of 4023. It’s currently down 1.1%.
It seems the comments from Premier Wen did little to help ‘risk appetite’, as traders once again sold into early strength.
Even a downwards revision to Q2 inflation numbers from the ABS couldn’t boost sentiment. The energy, financial and material sectors are detracting the bulk of the points, while the defensive telecoms sector is the only positive performer.
Looking ahead
Looking ahead to European trade and cheer for equity markets is looking somewhat short-lived as traders take stock of comments out of China.
Their speculated support for the Eurozone was seen as key in lifting sentiment yesterday. However, with Premier Wen starting to place his demands on the table, once again there's a solid reminder that navigating successfully out of the current crisis is very much a marathon, not a sprint.
The Eurozone sees some key meetings in the days ahead with the Merkel/Sarkozy/Papandreou conference call scheduled for today.
This could be critical in determining whether the next tranche of bailout funds is paid to Athens, even though Greece is set to miss its target on privatising public assets.
This is precisely the sort of line other nations want overlooked to avoid a Lehman-style event.
Looking at the shorter term, UK unemployment data is out in the next few hours, as are US retail sales, whilst earnings highlights include Barratt Homes and retailer Next.
Ahead of the open we're calling the FTSE down 36 at 5138, the DAX down 31 at 5135 and the CAC down 25 at 2870.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above comments do not constitute investment advice and neither IG Index nor SpreadBets.org.uk accept any responsibility for any use that may be made of them.
Advert:
IG Index Spread Betting - No Fees, No Commissions, Free Charts and Live Prices.
Spread Bet on Indices, Forex, Commodities, Shares and more. For details see IG Index.
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"Asian Spread Betting Markets Fall on Comments by Chinese Premier" last update by AG, 14-Sep-2011
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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