EUR/USD Spread Betting Market Falls After High Yielding French Auction
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 6 January 2011: 10.15am Update
Non Farm Payrolls day has dawned in London, with trading subdued as investors wait to see whether the world’s largest economy is indeed improving, or whether this week’s better data was merely a blip.
By 10.10am (London time), the FTSE 100 was up 0.35% at 5643.83, while the FTSE 250 had gained 0.5% to 10,194.34.
Non Farm Payrolls awaited
Nerves are running high in markets this morning, as investors await the most keenly-watched data point of the month, US Non Farm Payrolls.
Yesterday markets saw some positive figures from the ADP employment report, widely viewed as the precursor to the Non Farms, but despite exceeding expectations by a very wide margin, the numbers were insufficient to lift markets from their post-Christmas funk.
Spread betting account holders are unwilling to commit themselves too heavily ahead of the report, at 1.30pm London time, so moves in either a positive or negative direction are likely to be limited and short-lived.
A strong report that beats forecasts for a gain of 150,000 jobs in December could inject new life into the current uptrend in global markets. A good report will signal that the US economy is growing once more, with new jobs helping to boost confidence and spending by the all-important US consumer.
A bad report of course could easily wipe out the swathe of good data that we saw earlier in the week, and combine with fresh Eurozone worries to send markets lower.
Blacks Leisure heads into the sunset
The shares were suspended from the stock exchange at just 1.34p, 97% down on their January 2011 level of 42p.
No-one has been found to make a formal takeover of the company, with the brand and assets being sold off individually.
Blacks said that no value was attributable to the company’s shares, meaning that shareholders will likely receive nothing from any deal.
Robert Walters enjoys benefit of overseas operations
Recruitment firm Robert Walters has managed to offset poor conditions in the UK with stellar performances from its European and Latin American divisions.
Net fee income rose overall by 14%, but grew by 24% in Europe and 18% in South America. However, the firm said that it was aware of how difficult 2012 was likely to be, and that it would concentrate on expanding operations in the developing world. The shares rose 1.8% to 166p.
Iran keeps everyone on edge
Iran has announced a new set of military exercises for the Straits of Hormuz, one of the world’s most vital oil routes.
The US and its old antagonist have been waging a war of words over new sanctions for Tehran, with the US, UK and Europe looking to punish Iran for its nuclear weapons programme.
Given the power of the US Fifth Fleet in Bahrain, it is unlikely that Iran could close the straits for more than a few days, but the disruption to oil supplies would be immense.
US light crude is up again this morning, rising 0.4% to $102.21 per barrel, while Brent crude oil has gained 0.5% to $113.34 per barrel.
Looking ahead
US futures are barely changed this morning, as befits Non Farm Payrolls day and the caution that goes with it. Dow contracts are up 3 points and the S&P 500 March contract is barely 0.4 points higher.
As well as the Non Farms, the unemployment rate for December is published, and is forecast to tick up slightly to 8.7% from 8.6% in November.
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 06 January 2012: 5.00am Update
Overnight, US markets finished flat to marginally higher as investors continued to balance ongoing European issues against US economic data, confirming that the world’s biggest economy is on the slow path to recovery.
Among the major averages, the Dow Jones Industrial Average ended flat at 12415, the S&P added 0.3% to 1281, while the NASDAQ jumped 0.8% to 2669.
Among the major S&P sectors, the financial and technology sectors finished higher, while materials and energy were among the day’s worst performers.
In European trade, a French debt auction of 10 to 30-year bonds saw yields edge higher, while concerns escalated about the ability of European banks to raise fresh capital. This came after Italy’s biggest bank, UniCredit, could only do so at a massive discount to its prevailing price. These issues saw EUR / USD fall below $1.28 to its lowest level since September 2010.
Across the pond in the US, economic data once again offered investors some encouragement. The ADP private sector jobs report suggested some 325,000 private sector jobs were created in December, much higher than the 176,000 that had been forecast.
Weekly jobless claims also fell by more than expected, while planned layoffs at US firms fell 1.6% in December to their lowest levels since June, according to a report from consulting firm Challenger, Gray and Christmas.
These three data points boosted expectations for tonight’s Non Farm Payrolls report, which is currently predicting a headline jobs creation figure of 155,000.
Asia & Australia
Across Asia, regional markets are all lower after Wall Street finished marginally firmer, despite ongoing concerns about the prospects for Europe.
The Kospi is the region’s worst performer, lower by 1.7%, while the Hang Seng is seeing a loss of 1.4%. Elsewhere, the Nikkei 225 and the Shanghai Composite are 1.3% and 0.3% weaker respectively.
In Australia, the ASX 200 is currently 0.8% weaker at 4109, just off its earlier session low of 4107.
Investors today appear cautious ahead of the Non Farm Payrolls report, with broad-based losses being witnessed across the market. The consumer discretionary sector is the only sector in positive territory, while the materials and energy sectors are the day’s biggest decliners.
Europe
European bourses look set to see green on screen, although the gains should be very modest on the open. With the much anticipated core European bond auctions behind us until next week the spread betting markets sole attention now turns to the US Non Farm Payrolls report.
It has to be said that expectations are elevated given all traditional leading indicators have shown improvement from last month. As a result, we will need to see not only an above expectation print, but at least an inline unemployment rate and a not so dramatic revision to last month.
All eyes fall back on the euro, which is looking more and more like a corrective bounce is due, perhaps even more so against the crosses which will be welcomed by most who use it to establish better shorting levels.
The question traders are asking is whether we are seeing a return to traditional currency fundamentals where good US data supports the USD side of the equation, and so push EUR/USD ever lower, or will the pair rally on risk appetite?
It seems however that with the extra liquidity that the ECB are pumping into the system to support banks we are seeing a clear divergence between euro weakness and other risk asset such as the equity and commodity markets.
We might reasonably expect European markets to hold relatively steady until the jobs report is out and then get sliced and diced. However whilst a good jobs print will continue to assist the relative outperformance of US shares, with traders seemingly confident contagion is not going to affect the US anytime soon, European investors are a much more cautious bunch. Just how long the US feel good factor will last will be premised on rumour and speculation about any number of euro related issues.
Ahead of the open we are calling the FTSE -6 at 5618, DAX -2 at 6094 and the CAC -3 at 3142.
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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"EUR/USD Spread Betting Market Falls After High Yielding French Auction" last update by AG, 06-Jan-2012
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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