FTSE 250 Spreads Down on Fears of a Eurozone Split
|
|
|
For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 10 November 2011: 11.00am Update
European shares where lower this morning as the political and economic crisis in Italy and Greece spurred fears of a split in the Eurozone and a possible default.
However hopes that Italy will soon have a new government and push forward with the economic reforms added some much-needed support to equities.
By 10.30am (London time) the FTSE 100 was 0.49% lower at 5433.37 and the FTSE 250 was 0.4% down to 10,227.94. European shares were approximately 0.5% higher while the Italian FTSE MIB was up 2.11% as Italy's bond auction successfully raised €5 billion.
Italy scuttles to pass budget cuts
European shares trimmed their heavy early morning losses as Italy's Senate rushes to pass debt reduction measures that will clear the way for establishing a new government in a bid to restore confidence in the debt-laden nation.
The senate is set to vote tomorrow on a package of measures including asset sales and an increase in the retirement age with prime minister Silvio Berlusconi expected to resign the following day, immediately after the Chamber of Deputies vote on the package.
The yield on Italy's ten-year bond surged to a high of 7.38% yesterday, its highest close yet, and a level highly unsustainable for a country with a debt burden of €1.9 trillion.
Though increasing hopes of change emerged from Rome this morning, the escalating crisis prompted European Commission president Jose Manuel Barroso to issue a stern warning of the dangers of splitting the zone.
The warning comes after German chancellor Angela Merkel called for changes in the EU treaty and after French president Nicolas Sarkozy signal that some members might have to quit the Eurozone. The head of the International Monetary Fund, Christine Lagarde, called for political clarity this morning, in efforts to tackle the debt crisis that has gripped Italy.
Ms Lagarde expressed some optimism to the current turmoil saying that she was hopeful the technical details on boosting the EFSF to €1 trillion would be ready by December after Eurozone finance ministers agreed on Monday a roadmap for leveraging the fund.
Greek parties resume PM search
Greece's party leaders are scheduled to meet once more this morning in a fresh attempt to clinch a deal on establishing a national unity government, after days of political squabbling saw Greece inch closer to a default, leading to speculation that the country could exit the Eurozone.
Late last night, a deal brokered earlier in the day on naming the house speaker Filippos Petsalnikos to be the new prime minister abruptly halted when large sections of George Papandreou's PASOK party and the conservative New Democracy refused to back Mr Petsalnikos.
The stakes are now high as the coalition will need to win parliamentary approval for the €130 billion bailout and pass the 2012 budget in order to secure the latest €8 billion instalment of Greece's original rescue. Athens is in desperate need of the next tranche of funds in order to avoid bankruptcy when its debt repayments come due in December.
Sales up at Wm Morrison
Wm Morrison confirmed its position as the fastest-growing of Britain's top four supermarket groups this morning after it announced a rise in third-quarter sales. The grocer said that sales at stores open a year rose 2.4% in the 13 weeks to October 30 (excluding fuel and VAT sales tax) compared to 2.2% growth in the first half of its financial year.
The better-than-expected news was a boost to the company, with most retailers struggling while shoppers' disposable incomes are squeezed by higher prices, muted wages growth and government austerity measures.
Morrisons has successfully outperformed larger rivals for several quarters. Though they remain cautious on the overall economic environment, they said their financial outlook for the year remains unchanged. This morning shares in Morrisons were up over 1.25% to 311.5p.
US pre-market
Yesterday's carnage in markets appears to have been forgotten on Wall Street, with Dow futures and S&P 500 contracts both up 0.83% at 11,829.00 and 1235.80, respectively.
Looking ahead to this afternoon, at 1.30pm spread betting investors will digest import price, trade balance and weekly jobless claims figures. This is followed by consumer comfort figures at 2.45pm and the monthly budget statement at 7pm (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 10 November 2011: 5.00am Update
Global markets slid overnight as Italian debt yields escalated to euro-era record levels.
The 10-year Italian bond yields topped 7% for the first time in the euro era, completely erasing the optimism of the previous session. The spike in yields happened after LCH Clearnet SA raised the amount it charges clients for trading Italy’s government bonds and index-linked securities.
Reports that German Chancellor Angela Merkel was working on a plan to make it possible for European nations to exit the euro area also affected sentiment.
Among the major averages, the Dow Jones Industrial Average dropped 3.2% to end at 11781, suffering its worst one-day fall since 22 September. The S&P tanked 3.7% to close at 1229 and the Nasdaq declined 3.9% to close at 2622. Financial names were among the biggest losers, with the likes of Goldman Sachs falling over 8%.
Asia & Australia
Across Asia, regional markets are weaker as the headlines out of Europe overnight continue to affect sentiment. In economic news, China’s trade surplus widened in October, but missed economists’ expectations. The Hang Seng is leading the decline in the region with a 4.4% drop. The Nikkei is down 2.4% and the Shanghai Composite is 1.2% weaker.
Australia's S&P/ASX 200 is down 2.7% at 4230, after hitting a four-day low of 4205. Financial names are leading broad-based declines, with major banks down 2.6% to 5.8%, although ANZ and the National Bank are ex-dividend. Resources are also underperforming, with BHP Billiton down 2.4%, Iluka declining 6%, and Woodside Petroleum dropping 3.1%.
In economic news, unemployment fell to 5.2% in October from 5.3% in September, and full-time jobs rose by 20,000. Both of these figures beat expectations, but have not really done much for the Aussie market.
Forex
Turning to the forex spread betting market and it was a horror night for risk currencies, with the euro feeling the full brunt of a market that is searching for answers and finding none. As soon as LCH Clearnet announced it was raising the margin it applied to Italian debt, we knew it could be dark days in fixed income land. When the debt markets opened and sellers came out to play, so did EUR/USD.
LCH Clearnet decided to raise margins to try and smooth out volatility in seven- to ten-year maturities given the heightened political instability in Italy. The initial reaction was one of panic, however, with Italian ten-year bond yields pushing up to 7.48%.
European concerns
Traders clearly took the margin increases as a sign that Italy’s asset quality is diminishing and saw clear comparisons to Portugal and Ireland in the lead up to their bailouts.
An article in Germany’s Handelsbatt commenting on Angela Merkel’s CDU party making it possible for EU members to exit the EMU, while effectively retaining membership in the EU did the rounds, again highlighting that core Europe is warming and perhaps preparing for a ‘two-speed’ Europe.
Italian yields did find some buying support as the session went on, mainly thanks to aggressive buying from the ECB. The market wants to see the ECB become lender of last resort, however as we have heard time and time again, it simply does not want to go down this road.
This would involve printing euros to buy Italian debt. In the short term, this is not an option it has at its disposal, and is not even legal at present, though this is what the market seems to be demanding.
Tonight we will see Italy planning to sell up five billion euros in 12-month bills (around 20:30). This will be closely monitored to see the bid to cover levels ahead of Monday’s auction of five-year debt.
Given the current spike to yields, one would think demand will be lacklustre and could be another major headwind for EUR/USD. Given all the negative news flow out of Europe, one suspects the path of least resistance is clearly down with a move to 1.35 in its sights.
In the UK, traders will be eyeing today’s official bank rate and asset purchase facility announcement with no changes expected in either. Officials will probably wait to assess the developments out of Europe before making their next move.
Ahead of the open we're calling the FTSE down 81 at 5379, the DAX down 96 at 5734 and the CAC down 52 at 3023.
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 250 Spreads Down on Fears of a Eurozone Split" last update by AG, 10-Nov-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.
|
|
