Index Spread Betting: US Markets Edge Higher on Successful European Debt Auctions
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 13 January 2011: 11.00am Update
For the second day in a row, the performance of markets in the morning session hinges around a Eurozone bond auction.
Italy auctions medium-term debt today and bulls will be hoping that Rome can emulate Madrid's successful sale yesterday.
By 10.15am (London time), both the FTSE 100 and the FTSE 250 were up 0.5% at 5691.64 and 10,518.50 respectively.
FTSE rises, but caution remains
Markets have pushed higher once again this morning, although the overriding feeling still seems rather cautious.
Italy is the main focus, as the nation, which celebrated its 150th anniversary last year and is viewed by some as the Eurozone in microcosm, with a rich, industrious north and a poor, agrarian south, auctions three and six-year bonds.
Yesterday's auction by Spain went down very well, being as well-received as a second jug of Sangria at a party, with Madrid issuing double the planned amount.
Politicians in Rome will be hoping they can repeat the trick, and a successful sale could put some more fight into the FTSE 100.
However, a glance at the chart demonstrates that the FTSE shows considerable reluctance to break above the 5700 level.
In fact, the UK market remains fairly close to where it started 2012, having gone through gyrations either side but ultimately going nowhere fast.
Bulls will be hoping that the Italian auction will combine with JP Morgan's quarterly results later today to provide the necessary upward pressure.
Debt-ceiling crisis mark two?
When the entertaining saga of the US debt ceiling crisis ended in early August, markets breathed a sigh of relief.
Now it appears that the entire drama is about to replayed once more, with President Obama asking Congress for an increase in borrowing of $1.2 trillion.
Legislators have 15 days to approve the proposal, but Republicans are likely to use the request as further evidence of Mr Obama's lack of fiscal rectitude.
If this act degenerates into the kind of brinkmanship we saw in August, then all the good feeling created by the recent run of positive US economic data could dissipate, sending US shares lower once again.
Another missed opportunity for the shorters
Today's big loser is Invensys, which was ousted from the FTSE 100 in the middle of last year, with the engineering group seeing its share price collapse by 25% to 172.5p, back to levels not seen since early 2009.
'Operational issues' relating to operations management and the rail division will hurt profit, the company said, although the rest of the year is expected to be in line with expectations.
A number of problems were discovered with several contracts, leading to delays in completion of work. Shares in Invensys have halved over the past twelve months, having started 2011 at around 360p.
Looking ahead
US futures are quietly higher this morning, with the Dow up 10 points and the S&P 500 1.3 points higher.
US import prices and trade balance figures are out at 1.30pm (London time), while the main event will be the first reading of the January Michigan consumer confidence index, at 2.55pm (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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Spread Betting 13 January 2012: 5.45am Update
Overnight, US markets edged higher in thin trade on the back of two successful European debt auctions, despite some disappointing US economic data.
Among the major averages, the Dow Jones Industrial Average added 0.2% to close at 12,471, the S&P rose 0.2% to 1295, while the NASDAQ added 0.5% to finish at 2724.
Among the major S&P sectors, materials, industrial and financial names were again the best performers, while energy slipped on the session.
Europe and the US
It was a big session in Europe overnight. With the BoE and the ECB leaving rates unchanged, as was widely anticipated, most investor attention was focused on Spanish and Italian debt auctions.
Spain’s auction was met with strong demand at resulting yields that were lower than the same maturities late last year, while the Italian auction also saw yields on one-year maturities falling to their lowest levels since June 2011.
Obviously investors welcomed these developments, and European indices enjoyed a relatively solid session.
The positivity created by these successful auctions was somewhat offset by some weaker-than-expected US economic data.
Weekly jobless claims gained a greater-than-expected 24,000 to a seasonally adjusted 399,000, while retail sales rose by a disappointing 0.1% in December versus a forecast of 0.3%, their slowest pace in seven months.
This data came as a bit of surprise, as recent months have been characterised by US data beating expectations. Essentially we’re looking at a case of two steps forward, one step back.
Asia and Australia
Across Asia, regional markets are mainly higher after Wall Street again managed to eke out modest gains overnight.
The Nikkei 225 is the region’s best performer, higher by 1%, while the Hang Seng and the Kospi are seeing gains of 0.5% and 0.1% respectively. Elsewhere, the Shanghai Composite is bucking the trend to be lower by 0.6%.
In Australia, the ASX 200 is currently 0.3% firmer at 4194, just off its session high of 4203.
Once again, the market is lacking the impetus to make a sustained assault above 4200, and with it being Friday afternoon there appears little interest in establishing new positions heading into the weekend.
Performance across the market today is mixed, with gains across the energy, materials and industrial sectors being offset by losses for the consumer staples, information technology and healthcare sectors.
Looking ahead
Turning to Europe, markets are set to open with a positive feel despite Asia not doing much to aid sentiment.
All eyes are now falling on the fixed income market and whether sovereign yields can continue pushing lower. Italy saw yields in last night’s bill auction halve and this will give them confidence ahead of tonight’s two and four-year BTP auction.
The average yield they achieved in December was 5.62% and, given where yields are right now, one would suspect we are going to see another big fall here.
JP Morgan is the first bank off the block and expectations have been steadily revised down in recent times, which could serve the banking bulls well. It promises to be an interesting night.
Ahead of the open we’re calling the FTSE +23 at 5685, the DAX +40 at 6219 and the CAC +17 at 3216.
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.
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"Index Spread Betting: US Markets Edge Higher on Successful European Debt Auctions" last update by AG, 13-Jan-2012
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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