FTSE 100 Spreads Rise on Bank Recapitalisation Speculation
|
|
|
For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 5 October 2011: 11.00am Update
The FTSE 100 regained the 5000 level this morning, as the leading index received a powerful boost from last night's impressive turnaround in US markets.
Banks were lifted thanks to hopes of European action on bank recapitalisation, while a weaker US dollar gave an upward impetus to mining stocks.
By 11am (London time), the FTSE 100 was up 1.46% at 5016.75, while the FTSE 250 advanced 1% to 9525.9.
Banks up on recapitalisation rumours
It is a sign of how fragile things are that a story in the Financial Times prompted a massive rally in US markets last night. US markets had pushed lower during the session, until the FT said that European leaders were thinking about examining ways of propping up their banks with fresh funds.
Given that almost 18 months have elapsed since the beginning of the Eurozone debt crisis, I find it unlikely that any bank rescue plan will be forthcoming within any reasonable space of time. Still, it has been enough to give the banking sector a lift, with Barclays up 3.2% at 149p, while RBS and Lloyds advanced 2.3% and 1.9% respectively.
But Moody's takes the axe to Italy
Any further rally on the FTSE was limited by Moody's downgrade of Italy. The ratings agency, which showed a noted reluctance to cut the debt rating of the US, decided to slash Italy's rating by three notches, to A2 from Aa2, on concern that Rome would struggle to make a meaningful dent in its debt mountain.
In addition, Moody's said that all but the strongest Eurozone nations would endure 'negative pressure' on their ratings. Yield spreads between ten-year Italian bonds and their German equivalents widened to 381 basis points, reflecting increased concern among financial spread betting investors.
UK data growth still weak
In the UK, there was mixed economic news. The final revision of second-quarter GDP was published, and quarter-on-quarter growth was cut from 0.2% to 0.1%, with year-on-year growth trimmed to 0.6% from 0.7%. Growth in the services sector was reduced to 0.2% from 0.5%.
However, September PMI data for the services sector was released at the same time, and this provided some good news. Output unexpectedly expanded during the month, with the Markit index rising to 52.9 from 51.1 in August, defying those that had forecast a fall to 50.9.
The services sector is the largest component of the UK economy, and the news helped the pound to recover slightly during the course of the morning.
Tesco and Sainsbury do battle
Two of the UK's supermarket titans went head-to-head this morning, as Tesco unveiled first-half results while Sainsbury's published a trading statement. At Tesco, total sales were up 8.8% to £35.25 billion, but UK like-for-like sales declined by 0.5%.
Meanwhile, Sainsbury's sales for the first half were up 1.9% like-for-like (excluding fuel). Both companies highlighted the impact of higher petrol prices on consumer spending, adding that the overall position of the UK consumer remained precarious. Tesco dropped 0.4% to 378.7p, while Sainsbury's stole the limelight, rising 3.7% to 284.9p.
US pre-market
After yesterday's stellar rally in the US, Dow futures are down 0.2% while those for the S&P 500 are off by 0.13%.
US employment is in focus today, with ADP employment data (widely seen as the precursor for non-farms data) out at 1.15pm, while the ISM's non-manufacturing index is published at 3pm (London times).
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.
|
Spread Betting 5 October 2011: 6.00am Update
Overnight, US markets staged a dramatic last hour rebound, spiking sharply in the final 10 minutes of trade to finish with solid gains.
This followed a report that EU Finance Ministers are examining possible ways to recapitalise banks, after Ben Bernanke said that the Fed is willing to do more to support the economy.
Among the major averages, the Dow Jones Industrial Average added 1.4% to end at 10808, the S&P jumped 2.3% to 1123, while the NASDAQ soared 3% to 2404. Most S&P sectors finished higher, led by advances in financial and materials names.
Any good news will do
With an hour to go in trade, it was certainly looking like another sour day for US equities, with financial spread betting markets on track to register losses between 1% and 2%.
This occurred before reports surfaced that EU Finance Ministers were examining ways of co-ordinating recapitalisations of financial institutions, after agreeing that more needed to be done to shore up the region’s banks.
The fact that the market reacted so violently - we saw turnarounds in equities in the last hour of trade in the vicinity of 4% - is further evidence of its desperation to hang its hat on any sort of good news.
The market should be aware, however, that this supposed ‘bank aid plan’ is light on details. Also, recapitalisations require someone to stump up some money. Who’s going to do that?
Over the last several months we’ve heard a lot of rhetoric about ‘needing to do more’, but there’s a great reluctance for anyone to reach into their pockets. Until, or unless, decisive action follows this may prove to be just another opportunity to close long positions or establish fresh short positions.
Asia & Australia
Across Asia, regional markets are all lower, seemingly unconvinced by the late surge on US markets. The Kospi is the worst performer - lower by 1.8% - while the Nikkei 225 has shed 0.8%. The Shanghai Composite and the Hang Seng are closed for holidays.
In Australia, the ASX 200 is currently 0.8% firmer at 3905, having drifted well off its early morning highs of 3951. While heavyweight sectors including the materials, energy and financials are all up between 0.8% and 1.9% their gains have been significantly pared.
Elsewhere, the industrial, consumer staples and property trust sectors are all in negative territory.
Turning to the European session, UK GDP is set to be a highlight on the economic calendar today, whilst Eurozone retail sales for August are also due. A decline is expected here but anything too dramatic could lead traders back to the sell button once again.
Earnings news is set to be quite upbeat too especially in London with UK retail giants Tesco and Sainsbury both reporting, whilst Wall Street sees numbers from Marriott and Costco as well.
Ahead of the open we're calling the FTSE up 67 at 5011, the DAX up 95 at 5312 and the CAC up 48 at 2899.
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.
|
"FTSE 100 Spreads Rise on Bank Recapitalisation Speculation" last update by AG, 05-Oct-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.
Similar articles:
Spread Betting Daily - last update: 17-May-2012
Your daily spread betting update from the insiders. A look at the FTSE 100 and a range of other spread betting markets from Crude Oil to Shares to Gold to . . . read more Spread Betting Daily.
Spread Bets Daily Markets - last update: 16-May-2012
Spread Betting Daily News - A daily trading update from IG Index. Every weekday the experts offer their view of the markets . . . read more Spread Bets Daily Markets.
Shares Trading: AstraZeneca Declines on Plummeting Pre-Tax Profits - last update: 26-Apr-2012
Drug maker GlaxoSmithKline dropped 0.4% after it reported a 13% decline in first-quarter profits, while AstraZeneca declined 5.6% after it reported a 40% drop in pre-tax profits. Unilever shares climbed 3% to 2635p after sales rose . . . read more Shares Trading: AstraZeneca Declines on Plummeting Pre-Tax Profits.
ARM Holdings Spreads Rally amid Stellar Apple Results - last update: 25-Apr-2012
In equities spread trading, ARM Holdings was the top FTSE 100 gainer, up 4.3%, bouncing after a lukewarm reception to in-line results from the British chip designer on Tuesday. The price gain was on the back of forecast-beating . . . read more ARM Holdings Spreads Rally amid Stellar Apple Results.
Spread Trading: Rallying Banking Stocks Push FTSE Higher - last update: 24-Apr-2012
Banking stocks led the FTSE's marginal recovery. Lloyds rose 2.25 %, while Barclays, Standard Chartered and HSBC spread trading markets were up by 1.34%, 0.15% and 0.1% respectively. Miners also edged up today . . . read more Spread Trading: Rallying Banking Stocks Push FTSE Higher.
Index Spread Betting: FTSE Falls 100 Points as Sarkozy Losses Election Round - last update: 23-Apr-2012
The FTSE 100 shed a hundred points during the morning session as uncertainty over the French presidential election on Sunday unnerved investors. Current French President Nicolas Sarkozy lost to Francois Gerard Georges . . . read more Index Spread Betting: FTSE Falls 100 Points as Sarkozy Losses Election Round.
Broker Upgrade Boosts Lloyds Shares Spread Betting Market - last update: 20-Apr-2012
Elsewhere in shares spread betting, Lloyds was the second-biggest FTSE 100 gainer, up 3.5% as Investec Securities reiterated its 'buy' rating on the part state-owned British lender. Unsurprisingly, shares in Barclays and . . . read more Broker Upgrade Boosts Lloyds Shares Spread Betting Market.
FTSE 100 Spread Betting Index Rises on Successful Spanish Auction - last update: 19-Apr-2012
The FTSE 100 spread betting index traded at 5783.8, gaining 0.64% by midday (London time) on the back of a successful Spanish bond sale. Spain sold €2.541 billion of debt, slightly above the upper end of their target . . . read more FTSE 100 Spread Betting Index Rises on Successful Spanish Auction.
Increased Gold Output Causes Fresnillo Spreads to Rally - last update: 18-Apr-2012
Also in shares spread betting, Fresnillo was one of the mining sector's best performers, gaining more than 3% as gold output was ahead of target, due to the opening of a new mine, Noche Buena. This came despite an . . . read more Increased Gold Output Causes Fresnillo Spreads to Rally.
EUR/USD Forex Spreads Push Higher Despite Rising Spanish Yields - last update: 17-Apr-2012
Talk on the floors seems to be centred on the sharp move higher for the EUR/USD financial spread betting market in US trade, despite no one single catalyst to attribute the move too. One gets the sense though that $1.30 seems . . . read more EUR/USD Forex Spreads Push Higher Despite Rising Spanish Yields.
Spread Betting Daily Index - An index of Mid-Morning Daily Spread Betting Reports covering the key Index, Forex, Shares and Commodities markets.
|
|
|
Free Financial Email: Latest Spread Betting Offers and where to find narrow spreads.
Click here to sign up.
|
|
