Equities Spread Betting: Debenhams Rises on Better Than Expected Profits
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 20 September 2011: 11.00am Update
After a weak start, the FTSE 100 slowly accumulated gains during the morning session, helping to recover some of yesterday's losses.
For now, financial spread betting investors remain fairly sanguine about the downgrade of Italy and the lack of progress on the Greek crisis.
By 10.30am (London time), the FTSE 100 was up 0.8% at 5303.19, while the FTSE 250 had risen 0.46% to 10,275.70.
Italy and Greece keep eurozone in focus
From one embattled eurozone country to another. Yesterday the focus was on Greece, a country that seems at times to be only hours away from a default.
Today, Italy has taken its turn in the spotlight, following a credit downgrade. Rome escaped downgrade over the weekend by the skin of its teeth, as Moody's opted to keep the situation under review. However, just as Italian politicians began to breathe easily, Standard & Poor's stole Moody's thunder, cutting its rating on Italian debt by one notch, from A+ to A.
The downgrade is the first one in five years for Rome, with S&P saying that weak economic growth, a fragile government and higher borrowing costs would put pressure on the country.
S&P was unconvinced by the latest austerity measures being enacted by Italy, but the Berlusconi government hit back, saying that the move was a political one and had been influenced more by newspaper headlines than economic reality.
Too often, eurozone leaders have been quick to condemn markets and agencies such as S&P, rather than taking meaningful action to halt the crisis. It would be nice to think such action is forthcoming, but I suspect it is unlikely. Also see Spread Bet on Italian Bonds.
Meanwhile, in Greece, a conference call between Athens and its troika of overseers produced nothing of note except an announcement that talks will continue.
US markets gained sharply following the end of the call, but this was more a relief rally that no bad news emerged from the call. Greece said that the talks were productive, but ultimately the call changes little.
Greece is still under pressure to do more to cut the deficit, while popular discontent with what Greeks view as a foreign-imposed regime keeps on rising. While all this is going on, the country edges closer to running out of money.
William Hill weighs the odds for Probability
The new LSE takeover rules are prompting some interesting announcements to emerge from UK companies. The new strictures require companies to reveal more about takeover approaches.
Yesterday, gambling operator Probability said that it was in discussions about a buyout, and today bookmaker William Hill has confirmed it made the initial approach. William Hill said an offer would likely be made in cash, although it added the usual note to the effect that there was no certainty that an offer would be made.
Shares in William Hill were broadly unchanged at 228.6p, but Probability rose 5.5% to 68.55p, up 30% in two days.
Debenhams expects to outperform
Retailer Debenhams rose 3% to 61p after comments that it expects to beat forecasts for pre-tax profit for the full year. A trading update from the group showed that like-for-like sales (including VAT) were up 1.2% for the full-year, although they were down 0.3% excluding VAT.
The firm added that it remains cautious about the economic outlook, with consumer spending remaining weak.
US pre-market
US futures are slightly higher at present, with Dow futures up 0.1%, although S&P 500 futures are only up 0.03%, as eurozone concerns continue to weigh. US housing remains under the microscope, with the release at 1.30pm (London time) of building permits and housing starts for August. These indicators are expected to decline by 2.3% and 1.5% respectively.
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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"Equities Spread Betting: Debenhams Rises on Better Than Expected Profits" last update by AG, 20-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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