European Shares Spread Betting Markets Lifted by Coordinated Central Bank Interventions
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 16 September 2011: 11.00am Update
The FTSE 100 managed to keep climbing this morning, as investors basked in the afterglow of yesterday's co-ordinated central bank move.
Although the underlying situation is still largely unchanged, the action has given spread betting markets renewed confidence in the immediate outlook for the global economy.
By 11am (London time), the FTSE 100 was up 0.84% at 5382.17, and the FTSE 250 had gained 0.78% to 10404.57.
Market sentiment continues to recover
The final day of the trading week has started with stock markets rising further, building on their impressive gains from yesterday.
The pre-emptive strike by central bankers seems to be keeping risk sentiment broadly positive, as it reassures investors that central bankers are willing to intervene when necessary.
Everyone now looks to the meetings of the Eurogroup taking place in Poland today to show more determination to solve the Eurozone crisis.
For now, tensions have eased, but the problems afflicting Europe and the US remain unresolved. Greece is still perilously close to bankruptcy, with a default now accepted as the most likely outcome.
IMF head Christine Lagarde has openly warned that the fund may withhold its part of the next aid payment since Athens had only partly implemented the promised reforms. Her comments highlighted a worrying divide between the IMF and the EU, which said it was satisfied with Greece's recent concessions.
Santander pushes back IPO plans
The Vickers banking report, which was released at the beginning of the week, has prompted Santander to postpone its plans to list its UK banking operations.
The Spanish bank had expected to float 20% of its UK subsidiary in the second half of the year, but this has now been put back to 2013 at the earliest.
Some of Santander's activities may fall outside the retail ringfence, and so the new rules have complicated the listing process.
The big five UK banks all gained this morning, helped by yesterday's co-ordinated central bank moves. Barclays led the way with a 6.5% gain to 168.65p, while Lloyds rose 5% and RBS added 4.2%.
Domino Printing sees tough times ahead
There was little in the way of corporate news however, with only Domino Printing providing news of real note.
The food label maker provided a trading update, saying that sales had been in line with expectations for the first ten months of its financial year, but that demand was beginning to ease slightly in North America and Europe.
Domino spooked investors by adding that demand was likely to remain weak into next year, prompting the shares to fall 9% to 511p.
US pre-market
US futures are lower this morning, although they have risen from the levels seen earlier this morning.
Dow futures are down 0.1% and S&P 500 futures are 0.3% lower. Although today is relatively quiet for economic news, we will have the first September reading on the Michigan consumer confidence index.
It is forecast to rise to 57 from last month's figure of 55.7, but any unexpected drop in confidence could deliver a nasty rebuff to market sentiment, which remains remarkably fragile.
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 16 September 2011: 6.15am Update
In overnight trade, European and US markets all closed sharply higher for the fourth straight session.
This occurred as major central banks of the world agreed to lend US Dollars to European banks, triggering a big jump in global financials. This will help to ease the recent liquidity concerns that have plagued a number of European banks.
Both the S&P 500 and Dow Jones Industrial Average rose 1.7% to be the best performers, while the tech-heavy NASDAQ gained 1.3%.
Asia & Australia
Across Asia, regional markets are all firmly higher following the positive overnight developments in Europe and the US, which saw US Dollar funding lines opened up by global central banks.
This in turn saw money flow back towards risk assets, relieving some of the recent uncertainty. The Kospi is the standout performer, up 3.4%, while the Shanghai Composite, the Nikkei 225 and Hang Seng are all up between 0.5% and 2%.
In Australia, the ASX 200 is currently 2% firmer at 4154, just below its session highs of 4160.
After major central banks pledged overnight to offer lending and liquidity support facilities to European banks struggling to access short-term funding, market sentiment got a welcome shot in the arm with equity markets surging higher.
That sentiment has translated into broad-based gains for the Australian market, with the heavyweight energy, financial, materials and industrial sectors all higher between 1.8% and 2.8%.
European Trade
European shares spread betting markets set the pace yesterday, having been cheered by that coordinated central bank liquidity easing exercise.
The resulting rally seems to still have some legs left going into the weekend break, after equities in both the US and Asia followed suit.
With the momentum continuing into the European open there should, however, be a degree of concern that these liquidity measures underline just how critical the whole situation has become. The lack of growth in Western economies is really causing a lot of concern.
There's little on the economic calendar in the next few hours that has the potential to add much momentum to the rally, though Michigan consumer sentiment data will be under scrutiny after US markets open for the day.
Earnings news is also looking rather limited, although property consultancy DTZ holdings is due to report. As one of those stocks able to act as a barometer of the wider economy, it can expect to attract a degree of interest.
Ahead of the open we're calling the FTSE up 60 at 5398, the DAX up 62 at 5570 and the CAC up 31 at 3077.
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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"European Shares Spread Betting Markets Lifted by Coordinated Central Bank Interventions" last update by AG, 16-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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