European Spread Betting Markets Reverse Losses Ahead of Festive Break
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 22 December 2011: 12.00pm Update
European spread betting markets reversed all of the previous session's losses, though nagging worries over the Eurozone debt crisis could cap the rebound ahead of the holiday break.
By 11.45am (London time) the FTSE 100 had jumped over 1% to 5455.70, while the broader FTSE 250 was 0.62% up at 9903.75. Meanwhile in continental Europe, shares gained over 1%.
UK economy grows but outlook remains bleak
UK economic data released this morning showed that the economy grew unexpectedly faster than first thought in the third quarter of this year, as a result of stronger services and construction output.
However, the economy did not grow at all in the second quarter, with forecasts of a sharp slowdown at the end of this year and early in 2012.
The Office for National Statistics revised third-quarter GDP growth up to 0.6% on the quarter from 0.5%, but left the annual rate of growth unrevised at 0.5%.
Meanwhile second-quarter growth was downwardly revised to show the economy had stagnated, after a previous estimate of a 0.1% rise.
Though Q3 growth was relatively encouraging, the economic outlook is deteriorating amid continued worries that the Eurozone debt crisis will lead the UK back into recession. This has encouraged the Bank of England to leave the door open for further stimulus in February.
Separately, the household saving ratio rose to 6.6% in the third quarter, suggesting UK consumers are less reluctant to let go of their cash ahead of a lingering recession.
However, BoE policymakers see some optimism as they expect a sharp fall in inflation in the first quarter of next year, which will leave households with more spare cash.
IAG buys BMI for Heathrow growth
International Airlines Group (IAG) announced this morning that it has won the takeover battle against Virgin Atlantic for Lufthansa's UK unit of BMI, for £172.5 million in cash.
This includes taking responsibility for the British airline's defined benefit pension scheme’s liabilities of about £180 million. The deal gives IAG another 56 daily take-off and landing slots at Heathrow (Europe's busiest airport), which is operating at full capacity after plans to build a third runway were scrapped.
IAG announced that in an effort to stem losses at BMI, which totalled £153 million (pre-tax) last year, there will inevitably be some job losses. Though Lufthansa will make an overall loss on the sale, it will benefit from shedding a structurally loss-making subsidiary.
IAG's shares were up 2% at 148.2p, while shares in Lufthansa were up over 2% at €9.22.
US pre-market
US March futures are pointing to a positive open on Wall Street this afternoon with the Dow Jones Industrial Average forecast to start 50 points higher at 12,074, and the S&P 500 up 0.49% at 1242.40.
Looking ahead to this afternoon, the US index spread betting markets will see a busy day in terms of economic data.
At 1.30pm (London time) weekly jobless figures are released alongside personal consumption and third-quarter GDP data.
This will be followed by consumer comfort and economic expectation figures at 2.45pm and the Michigan confidence index at 2.55pm (both London time).
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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"European Spread Betting Markets Reverse Losses Ahead of Festive Break" last update by AG, 22-Dec-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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