Gold Spreads Reverse as Investor Risk Appetite Increases
|
|
|
For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 7 September 2011: 11.00am Update
London shares broke their two-day losing streak to post solid gains this morning, helped by news that the German constitutional court had ruled that the Eurozone bailouts did not breach German law.
By 10.45am (London time), the FTSE 100 was up 1.85% to 5252.11, while the FTSE 250 rose 1.36% to 10208.30, with the second index hit slightly by bad news on UK industrial production.
German court issues ruling
All eyes turned to the German city of Karlsruhe this morning, as the German constitutional court delivered its verdict on the legality of the Eurozone bailouts.
As had been expected, the judges did not strike down the bailouts of Greece and other members, saying that the measures did not impinge upon the budgetary authority of the Bundestag.
The news was greeted with universal relief across global markets, since a less-favourable ruling would have had dire consequences. The euro rallied, while equity markets clung on to their gains from earlier in the session.
However, the president of the court said that the decision had been very close, adding that the result should not be interpreted as a blank cheque for further bailouts.
Instead, the budgetary committee of the Bundestag must be consulted before further German funds are used to rescue other European states, and this precedent raises the possibility that other states may enact laws that require parliamentary oversight.
For now, indices spread betting markets are happy about the news, but reality might set in later on as investors read and digest the actual ruling. Regardless of the court's decision, Chancellor Merkel still faces increasing opposition among her own coalition, and Italy has still to pass more austerity measures. We have not seen the end of this drama yet.
Gold falls and risky assets gain
While riskier assets raced higher this morning, gold spreads reversed course and fell back. The yellow metal hit a low of $1818 per ounce, and by 10.45am (London time) it was at $1848 (interestingly, 1848 was the year that revolutions convulsed most of Europe).
The news from Germany pushed banking shares higher again, with Lloyds leading with a 4% gain and RBS rising 3%. The other three major banks, HSBC, Standard Chartered and Barclays, all added 2%.
Mining stocks were given a lift by better-than-expected Australian GDP data, but gold miners Randgold, African Barrick and Petropavlovsk all fell as the price of their main product dropped.
Dixons shares rise despite sales slump
Shares in struggling retailer Dixons rose 5.3% to 11.15p despite the announcement of yet another decline in like-for-like (LFL) sales. LFLs in the UK and Ireland division were down 10% for the three months to 23 July, while the drop for the group overall was 7%.
Dixons hopes that 2012, with its large number of 'popular' sporting events will help drive sales. The declines were not as bad as feared, but with even the e-commerce division seeing a drop in sales, it's hard really to see how Dixons will manage to post solid growth for some time yet.
US pre-market
US futures are currently higher, up 0.8% and 1% for the Dow and S&P 500 respectively, suggesting that Wall Street, which began to recoup losses towards the end of last night's session, will keep rising this afternoon.
On the economic list today is weekly mortgage data, plus the Fed's Beige Book survey of the US economy, with its informal interviews with businesses and industry across the United States.
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 7 September 2011: 6.00am Update
In the US overnight, stocks finished the session broadly lower but well off their intraday lows, as concerns over the potential for another recession remained and worries escalated over the Greek bailout.
The Dow Jones Industrial Average was the worst performer - down 0.9% - while the S&P 500 and NASDAQ fell 0.7% and 0.3% respectively.
Asia & Australia
Across Asia, regional markets are all sharply higher after US indices staged a strong rally from their lows, after surprisingly better-than-expected ISM Non-Manufacturing PMI data.
Short covering is also helping to drive shares higher following three consecutive days of losses. The Kospi is the best performer - up 2.6% - while the Shanghai Composite, Nikkei 225 and Hang Seng were all firmer between 1.2% and 1.7%.
In Australia, the ASX 200 is currently 2.4% firmer at 4173, right on its highs of the session. After US markets fell much less than expected overnight, the Australian spread betting market has been playing catch up today to negate some of yesterday’s overselling.
A stronger-than-expected read on Q2 GDP has also helped boost sentiment in Australia. As a result we are seeing broad-based gains today with the heavyweight materials, financial, industrials and energy sectors all seeing advances of between 1.8% and 2.7%.
Equity markets grinding higher
After a choppy start to the shortened week's trading on Wall Street, equity markets spent much of yesterday's session grinding their way higher. The major US indices may still have finished in the red but the momentum has been established.
We've seen broad-based gains across Asia as a result and the trend is set to extend into European markets at the open as well.
Much of this, however, seems to revolve around that single better-than-expected ISM reading from the US yesterday, plus the increase in risk appetite after the SNB's significant intervention. So sustaining the rally is clearly the next challenge.
With Eurozone woes continuing - a general strike was held in Italy yesterday against the austerity measures - this is another proverbial millstone round the necks of many. Any signs of progress here are likely to be well received, including today's vote by Germany on the legality of the Greek bail-out.
Economic news today will be dominated by Industrial Production data from the UK and Eurozone, mortgage applications from the US then the Fed's Beige Book after the European markets have closed tonight. Earnings news remains relatively low key, though UK high street mainstays Dixons Retail and Thorntons both report.
Ahead of the open we're calling the FTSE up 71 at 5228, the DAX up 98 at 5292 and the CAC up 54 at 3020.
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.
|
"Gold Spreads Reverse as Investor Risk Appetite Increases" last update by AG, 07-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.
Similar articles:
Spread Betting Daily - last update: 21-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: 18-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.
|
|
