Delay in Proposed Banking Sector Regulation Boosts RBS Shares
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 1 September 2011: 11.00am Update
Struggling to keep up this week’s rally, financial spread betting markets entered the new month cautiously this morning and we saw European equities trading lower.
By 10am (London time) the FTSE 100 was 0.47% lower at 5369.35 whilst the broader FTSE 250 was down 0.49% at 10,474.75.
Affected by manufacturing PMI data released this morning, the German DAX fell 2% to 5669.13 after the figures came in lower than expected. The French CAC lost 1.3% to read 3214.37 as its manufacturing PMI activity index showed a contraction.
Weak Chinese manufacturing PMI data
Data released from China today revealed a drop in exports, which weighed on metals prices and added pressure onto miners. Data on exports revealed a bleak picture as the new export orders index fell to 48.3 in August from 50.4 in July.
The weak reading is a worrying sign for the export-dependent economy and suggests that China was affected more than analysts had predicted by turbulent global markets in August.
China's official PMI data on the other hand saw a slight rebound in August to 50.9 compared to 50.7 in July, however economists continued to warn that the outlook for the country's exports is deteriorating.
Meanwhile, the HSBC China manufacturing PMI showed a similar improving trend, rising to 49.9 in August from 49.3 in July, yet indicating a continued contraction in business activity.
European manufacturing PMI data
Further data published this morning saw manufacturing activity in the Eurozone contract more than analysts had estimated, sending the PMI activity index to a two-month low.
The August PMI for manufacturing dropped to 49.0 from 50.4 in July, falling short of a 49.7 forecast. National PMI readings in Germany, the Netherlands and Austria remained above the 50.0 expansion level, while in Ireland, France, Italy, Spain and Greece, manufacturing activity showed a contraction.
This morning’s data, in conjunction with recent European GDP data which rose a meagre 0.2% in the second quarter, provides a growing risk that the Eurozone could slide back into recession.
In a separate report, manufacturing activity in the UK shrank at its fastest pace in over two years in August, further signalling that the economic recovery is stalling. The manufacturing PMI activity index fell to 49.0 from an upwardly revised 49.4 in July.
The data is likely to support expectations that the Bank of England will leave interest rates at their record low of 0.5% next week and may even ignite speculation the bank will consider further economic stimulus.
Banks avoid shake-up until 2015
Banks continued to see significant gains this morning as they welcomed the announcement that saw the proposed ring-fencing of their retail arms from other banking operations postponed until 2015.
Banks have lobbied against these changes as they believe the proposals will impose additional burdens at a time when they are being told to increase business lending.
RBS saw the biggest gain in its share price, surging over 8% to 26.55p. Lloyds jumped almost 6% to 36.99p, whilst Barclays was up over 5% to 182.79p.
US pre-market open
After enjoying four consecutive days of gains, US September futures point to Wall Street opening lower this afternoon. S&P 500 futures were 0.42% lower at 1212.60 and Dow Jones futures were down 0.33% to 11,565.00 by 10am (London time).
Ahead of tomorrow’s widely-watched US non-farm payrolls numbers, US data due for release today include weekly jobless claims and non-farm productivity due at 12.30pm (London time), and the ISM’s August manufacturing index and ISM prices paid, to be released at 2pm (London time).
Poor readings could further increase shares spread betting investors' optimism that the US Federal Reserve might announce some measures to stimulate the economy during their next meeting at the end of September.
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 1 September 2011: 6.00am Update
In the US overnight, the major indices all closed modestly higher as we finished out the worst August in ten years.
Markets had been down at one stage, before stronger-than-expected Chicago PMI data helped to settle investors’ nerves, ahead of the jobless claims and non-farm payrolls figures due in the days ahead.
The Dow Jones Industrial Average and S&P 500 both rose 0.5%, while the technology-laden NASDAQ added 0.1%.
Asia & Australia
Across Asia, regional markets are mostly higher following the stronger-than-expected Chicago PMI figures overnight, and on hopes that the US Federal Reserve will implement further stimulus measures to help support the economy.
The Kospi is the top performer - up 1.9% - while the Hang Seng and Nikkei 225 are both up more than 1.2%. In China, however, the Shanghai Composite is 0.2% softer following the in-line PMI reading.
In Australia, the ASX 200 is currently 0.4% firmer at 4313, well off its earlier session highs of 4354.
After better-than-expected retail sales and private capital expenditure data the Australian spread betting market surged 1.3% higher but has drifted in early afternoon trade.
That said, gains on the day are relatively broad-based, with the heavyweight energy, materials and financial sectors all seeing meaningful advances. The defensively postured healthcare sector is the only sector trading in negative territory.
The upbeat economic news from the US yesterday has certainly given the majority of Asian markets a solid start to the new trading month, with this sentiment being reinforced by expansion in the Chinese PMI readings too.
Europe
August certainly finished with a flourish for European markets. In light of the strong gains here, the futures are currently suggesting we will see a degree of consolidation at the open.
There are, however, a couple of key readings to come before then, perhaps most notably German GDP. With concerns mounting that the European economic powerhouse is itself starting to feel the strain, there's perhaps every reason to be cautious in the short term.
UK and Eurozone PMI data will follow shortly after trading gets underway, whilst US ISM manufacturing and prices paid data will also be under scrutiny.
There's also some potentially interesting earnings news out in the coming hours with global recruitment firm Hays always a good barometer of the business climate, whilst Hargeaves Lansdown and Punch Taverns are also amongst the higher profile reports in London.
Pernod Ricard and Canal+ are both due from Paris, whilst Wall Street may find some direction from the usual flurry of sales releases from various retailers.
Ahead of the open we're calling the FTSE down 8 at 5387, the DAX down 12 at 5773 and the CAC down 15 at 3272.
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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"Delay in Proposed Banking Sector Regulation Boosts RBS Shares" last update by AG, 01-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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