Spread Bets Daily Markets
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For today's update see Spread Betting.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 8 September 2010: 11.30am Update
The FTSE 100 is experiencing a second day in decline, as the index continues to pare last week's gains.
London's blue chip index is in retreat again this morning, sagging under the weight of its troubled financial and basic materials sectors.
At 11am (London time) the FTSE was down 35.75 points (-0.66%) to 5371.81. The broader FTSE 250 index is similarly struggling, down 61.76 points (-0.61%) to 10119.51.
In Europe, the leading continental indices are mirroring London's FTSE 100 this morning, each having fallen sharply just after the open. France's CAC 40 is down to 3618.26, a drop of 25.55 points (-0.70%), while the Dax in Germany is currently trading at 6073.84, down 44.05 points (-0.72%).
Bankers and miners are leading this morning's decline in London as investors speculate that a slowdown in economic growth could lead brokerages to suffer from dropping revenues and the Australian government once again broaches the subject of its proposed natural resources tax.
With miners and banks both suffering, African Barrick (+1.84%), Centrica (+1.60%) and ARM Holdings (1.58%) are the somewhat unlikely trio at the very front of the FTSE index this morning.
Barclays has been near the foot of the leader board again this morning, down 10.70p (-3.41%) at 11am (London time), perpetuating yesterday's 1.8% slide. Today's drop can be attributed in part to comments from Meredith Whitney that brokerages around the world may have to shed as many as 80,000 jobs in the next 18 months.
The former Oppenheimer & Co analyst, now running her own firm, said in a report that as growth begins to slow, and after 2010 compensation payments have been made, job cuts will inevitably follow. [1]
Royal Bank of Scotland also fell pennies on the news, down 1.17p (-2.54%) to 44.94p, while Investec and Lloyds were also seen in retreat at 483.60p (-1.65%) and 71.60p (-1.26%) respectively.
Miners have also been weighing on the index this morning amid renewed talk about the proposed mining tax in Australia. The tax is set to be discussed by the Australian Labour Party's independent lawmakers and the committee charged with designing the tax, but Australia's new minority government is already aiming to implement the legislation in July 2012. [2]
Vedanta Resources is performing worst among miners, down 49p (-2.47%) at 11am in London, while Eurasian Natural (-1.99%), BHP Billiton (-1.98%) and Kazakhmys (-1.61%) have also struggled in light of the news.
There were further questions raised about the strength of the UK job market this morning when a report from the Recruitment and Employment Confederation revealed the news that job appointments in August increased at their slowest rate in ten months.
Public sector hiring freezes are starting to affect job figures, and calls are again going out to the government to increase support and awareness within the increasingly fragile local labour market. [3]
It's a fairly quiet day in terms of economic data in the US, but London will look to the open on Wall Street with interest this afternoon. Investors will want to get an idea whether this is all just a minor correction and the economic recovery remains broadly on track or if current market movements are potentially indicative of a more sustained retreat.
Sources: [1] [2] Bloomberg News (08 September 2010),
Sources: [3] BBC News (08 September 2010)
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 8 September 2010: 06.30am Update
On Wall Street overnight, US stocks declined for the first time in five days, snapping their longest winning streak since July on renewed concerns over the European debt crisis.
A Wall Street Journal article reported the European bank stress tests weren’t as comprehensive as they should have been, with some banks actually holding riskier portfolios than had previously been revealed.
For the session, the S&P 500 was the worst performer, down 1.2% while the NASDAQ and Dow Jones Industrial Average fell 1.1% and 1% respectively.
Across Asia, regional markets are all tracking US leads lower after renewed concerns about the health of European financial institutions. As of 06:00, the Nikkei 225 is the worst performer, down 2.4% as the Yen’s advance to a fresh 15-year high hurt exporters and sapped investor confidence. Elsewhere, the Hang Seng, Kospi and Shanghai Composite are all down between 0.4% and 1.5%.
In Australia, the ASX 200 is 0.7% weaker at 4540, right on its lows of the session. Concerns about the stability of the new government and weak US leads are weighing on the market and reversing some of the positive sentiment established in the first week of September.
Defensive sectors such as telecommunications and consumer staples are the clear outperformers today while the heavyweight financials and materials sectors are the biggest losers with the potential reality of a new mining tax adding to selling pressures across resource names.
Against this backdrop, European markets are set to start Wednesday's session on the back foot and with jitters being seen in the market over the strength of regional banks, the downside could prove somewhat protracted. This is compounded by the solid run we've seen on the financial spread betting markets over the last couple of weeks that could make profit-taking attractive.
After yesterday's disappointing German factory order data, expect trade balance and industrial production readings from the Eurozone’s largest economy to be under some scrutiny, whilst UK industrial production will also be closely watched.
In terms of earnings news, it's UK house builder Barratt that will be in focus as again this gives some kind of barometer for economic confidence in the country, whilst after the European close US consumer credit is also set to be in focus.
Ahead of the open we're calling the FTSE down 35 at 5373, the DAX down 24 at 6094 and the CAC down 18 at 3626.
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 7 September 2010: 12.00pm Update
The FTSE fell for the first time in seven days today as worries about the Eurozone banking sector resurfaced, encouraging investors to take profits across the board.
Banks were under pressure this morning, after the Wall Street Journal reported that the Eurozone’s recent 'stress test' on banks underestimated some lenders' holdings of potentially risky government debt. This means that certain banks may not be as safe as initially perceived.
Lloyds Banking Group slid 1.7% to 71.65p, RBS fell 1.9% to 46.07p and Standard Chartered declined 1.2% to 1838p.
Barclays retreated 3.4% to 311.85p, despite Bob Diamond being appointed as the group's new chief executive. He will replace current head John Varley next year. Mr Diamond is credited for building Barclays Capital into a major investment and many analysts believe that he is the right person for the role, so its a bit of a surprise to see Barclays underperform the sector today.
Risk aversion in the banking sector struck commodities and resource shares as well. In addition, Rio Tinto, BHP Billiton and Xstrata have already encountered a bout of profit-taking during the Australian trading session on news that Julia Gillard remained the country's prime minister after winning the backing of two key independent MPs. This means that the dreaded Australian resource tax on mining projects is back on the table.
Rio Tinto lost 2.3% to 3430p, BHP Billiton was 1.5% lower at 1892p and Xstrata dropped 2.5% to 1062p. Meanwhile, high-grade copper fell 1.4% to $3.448 per pound, October light sweet crude oil (WTI) retreated 2.3% to $72.83 a barrel while gold edged 0.3% lower to $1,246.2 per troy ounce.
The market appears to have become rather bearish all of a sudden and strategists have told CNBC that stocks and gold spreads are poised for a sell-off and that oil could hit $54 a barrel this year.
By 11.15am (London time) the FTSE 100 Index was trading at 5389.84, representing a 49.35 point (-0.91%) drop from the prior day's close. The FTSE 250 Index fell 84.89 points (-0.83%) to 10155.52.
There was some positive news on the economic front today. UK retail sales growth accelerated last month, thanks to robust clothes sales. According to the British Retail Consortium (BRC), UK retail sales values increased 1% on a like-for-like basis from August 2009, when sales had fallen 0.1%.
The BRC said that clothing and footwear sales strengthened, helped by new autumn/winter ranges and back-to-school buyers. Discounting played a part in the improvement and consumers remain reluctant to splash out on expensive items, the report added.
Looking ahead, the Dow and S&P 500 futures were trading between 0.40% and 0.50% in the red, suggesting the Wall Street is currently gearing up for a negative start this afternoon. Investors should watch out for the Fed's Beige Book, which will provide greater insight into the state of the US economic recovery.
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 7 September 2010: 06.30am Update
Across Asia, regional spread betting markets are mostly lower in today’s trade, with the lack of leads from US markets due to their Labor Day holiday offering traders little in the way of direction.
As at 06:00, the Nikkei 225 is the worst performer, down 0.5% as exporters continue to come under pressure from the stronger Yen. Elsewhere, the Shanghai Composite and Kospi are 0.3% and 0.2% weaker respectively while the Hang Seng is bucking the trend, up 0.1%.
In Australia, the ASX 200 is 0.1% softer at 4573, off earlier highs of 4588. The market’s non-reaction to the RBA’s decision to keep rates on hold was not surprising, with the main focus on the expected announcement as to which party will form government. Gains among energy, financial and consumer discretionary names are being offset by weakness in the more defensive sectors.
With US traders set to return to their desks after the Labor Day holiday, the summer is arguably now behind us and gains from the last couple of weeks will find themselves tested.
The FTSE has seen seven consecutive positive sessions now and, although Asian stocks may be floundering with no leads from the US, after yesterday's hiatus there's a scattering of both economic and corporate data around that should provide some pointers for Europe.
German factory order numbers will be under scrutiny to see if month-on-month growth can be sustained, whilst a trading statement from Whitbread in the UK also has the potential to offer some insight as to discretionary spending amongst consumers.
As the week progresses, US consumer credit and trade balance data will steal traders' focus and the Dow holding clear of that 10,000 level could well prove instrumental to any hopes of sustaining the upside on a broader basis.
Ahead of the open we're calling the FTSE down 3 at 5436, the DAX down 5 at 6150 and the CAC down 1 at 3684.
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 6 September 2010: 11.30am Update
FTSE spread bets continued to build on Friday’s gains, when private sector Non Farm payrolls rose more than expected.
Equity market sentiment was upbeat, as Friday’s Non Farm payroll report appeased worries about a double-dip recession in the US. The closely watched report showed that the US economy added 67,000 new jobs in the private sector last month, beating expectations of a 40,000 increase.
Also encouraging was July’s upward revision, which showed the US economy adding 107,000 private sector jobs in July. This compares with an originally reported 71,000 gain.
Although better-than-expected, the trend in US private sector jobs growth is losing steam and the US unemployment rate is increasing, so tread carefully, the recovery in the US labour market isn’t strong enough to justify anything sustainable yet.
Olivier Blanchard, the chief economist at the International Monetary Fund (IMF), told France's Le Figaro that he expects weak growth in both the United States and Europe. Mr Blanchard said consumption and investment were still weak in Europe, while the financial system was also fragile.
The IMF chief economist also said a slowdown in the US economy could trigger a ‘significant’ slowdown in Asia. However, he added that there may be a ‘decoupling’ between emerging and advanced economies, which could be achieved by Asian and Latin American economies reorienting their economies towards domestic demand. [1]
Meanwhile, a domestic report released this morning showed that new car registrations for August plummeted 17.5% from the same month last year due to the end of the subsidy scheme for new cars.
On a more positive note, however, the Engineering Employers Federation (EEF) indicated that UK manufacturing firms were enjoying ‘buoyant’ trading conditions thanks to growing demand from overseas customers.
Greater confidence was encouraging firms to hire staff, the report added. The EEF report warned there was still a risk to growth next year despite the level of short-term optimism because of the weaker US outlook and fiscal austerity in the UK.
By 10.40am (London time) the FTSE 100 Index was trading 21.04 points (+0.39%) higher at 5449.19 while the broader FTSE 250 Index was 45.67 points (+0.45%) ahead at 10249.78.
Energy majors contributed to gains on the FTSE this morning, with BP up 1.1% to 406.15p after the Financial Times reported that the company may sell its Alaskan assets.
According to the newspaper, the company tried to sell half of its 26% stake in the Prudhoe Bay sale of Alaskan assets, but the deal became too complicated and Apache instead agreed to buy onshore gas assets for $7 billion. Meanwhile, the Sunday Times has reported that BP has upped its target for asset sales from $30 billion to $40 billion.
Banks were mixed meanwhile, with Barclays and Standard Chartered losing 0.74% and 0.43% respectively following a profit warning from Australia's top investment bank Macquarie Group.
Elsewhere, Cable & Wireless Worldwide rallied 4.7% to 76.4p on takeover speculation. According to the Independent on Sunday, Singapore Telecommunications (SingTel) is considering a bid for the telecoms group.
US equity markets are closed for the Labor Day holiday today, so trading is likely to be thinner than usual.
Source: [1] RTT News (6 September 2010)
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 Bets Daily Markets" last update by AG, 08-Sep-2010
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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