Indices Spread Trading Markets Lower on Eurozone Sovereign Debt Worries
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 30 September 2011: 11.00am Update
The final trading day of the third quarter saw the FTSE 100 slip again, as Eurozone worries sent the leading index down.
A drop in German retail sales for August raised fears about the health of the Eurozone’s strongest economy, while talk of a Eurozone recession is becoming more and more commonplace.
By 10.45am (London time), the FTSE 100 was down 1.13% at 5138.27, and the FTSE 250 had shrunk 1% to 9884.48. The falls were more severe in Europe, with the DAX down 2.4% and the CAC 40 losing 1.65%.
Markets fall on lack of Eurozone deal
Cold reality seems to have set in this morning, as a choppy third quarter draws to a close. The euphoria over the German bailout vote has disappeared, as indices spread betting markets wake up to the fact that the Eurozone is no closer to any kind of meaningful deal to solve its sovereign debt crisis.
Risk appetite was not helped this morning by news that German retail sales fell in August, slumping by 2.9% compared to July. The drop was the biggest in more than four years, and shows that even the German economy is not immune to the wider crisis in Europe.
German consumers are becoming increasingly nervous about the outlook for the economy and as a result are imitating their counterparts in the UK and US, choosing to reduce spending and preserve cash.
Banks & miners both down
Banks had been in the ascendant yesterday, on hopes that the Bundestag vote signalled a new spirit of cooperation among the Germans for the European project.
However, today the sector has fallen back again, with Standard Chartered the biggest faller with a loss of 4% to 1302p despite comments from its chief executive that the firm would be able to maintain double-digit income and profit growth. HSBC was down 3.5% at 494.75p, while Barclays and Lloyds saw losses in excess of 1%.
Yesterday's positive US data has not been enough to lift spirits in the mining sector, with the share prices of raw materials companies down yet again. Vedanta fell 2.7% to 1078p, followed by Antofagasta with a 2% decline to 939p.
However, gold and silver miners were higher, helped by gains in the price of precious metals. Fresnillo was up 4% to 1575p (although the Mexican silver miner is still down 20% for the month) while Randgold Resources rose 1.5% to 6220p.
However, the losses on the FTSE 100 today should be seen in a European context; whatever fine words emerge from various politicians, there is no solution in sight for Europe, Greece still hovers on the edge of a default and Italy and Spain remain only a few percentage points on their bonds away from contagion.
Safe havens still have their appeal, with investors keeping yields on US Treasuries and German Bunds down, with ten-year yields both at 1.97%.
Qinetiq advances
The Royal Navy might be in the midst of a painful redundancy process, but defence firm Qinetiq has continued to enjoy strong trading of late.
The performance in its first half had been better than expected, although much of its US business was weighted to the second quarter. Nonetheless, the shares rose 1.76% to 115.7p as Qinetiq said a reduction in its UK and US businesses would be offset by cost reduction efforts.
US pre-market
US personal consumption and spending data are published at 1.30pm (London time), while at 2.55pm the final September revision of the Michigan consumer confidence index is released. US futures are down 0.75% for the Dow Jones and 1.05% for the S&P 500.
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 30 September 2011: 6.15am Update
In the US overnight, stocks opened the session significantly higher as sentiment was boosted by stronger-than-expected US economic data and the successful vote in Germany to expand the EFSF.
From there, however, the markets slumped to be down 1% in afternoon trade before the buyers stepped in, pushing it back into positive territory. The Dow Jones Industrial Average was the top performer - rising 1.3% - while the broad-based S&P 500 added 0.8%. The technology names did not fare as well, however, with the Nasdaq losing 0.4%.
Asia & Australia
Across Asia, regional markets are mostly lower as traders seemed to ignore the positive close on Wall Street and look to lock in profits for the week. The Hang Seng is the worst performer - down 1.7% - while the Kospi and Shanghai Composite are 1% and 0.5% weaker respectively. On the upside, the Nikkei 225 is seeing modest gains of 0.2%.
In Australia, the market gave up early gains to trade slightly lower in early afternoon trade as spread betting investors looked to lock in profits for the week, ahead of important economic data out of the US this evening and China tomorrow.
Currently, the ASX 200 is 0.2% lower at 3999, well off early highs of 4035 and lows of 3980. Financials, consumer staples and materials are doing most of the damage while energy names are among the best performers.
Europe
Looking ahead to European trade, and equity markets continue to lurch around as trader sentiment swings from positive to negative and back again.
Wall Street managed to rally into the close last night on the back of some better-than-expected US data and also the fact that the German Bundestag returned a solid line of unity over expanding the EFSF.
Despite early gains across Asia, markets are now unwinding and eyeing a rather downbeat finish to the quarter.
There's going to be quite a flurry of data to finish the week on however, so Europe and the US could yet find some renewed support - German retail sales, Eurozone unemployment and the University of Michigan consumer sentiment readings are all to come.
Earnings news is looking relatively low-key, but month and quarter end portfolio rebalancing aside, yesterday's strength of vote in Germany does underline a commitment to overcoming this significant macroeconomic hurdle, namely the European sovereign debt crisis.
Ahead of the open we're calling the FTSE down 29 at 5168, DAX down 19 at 5621 and the CAC down 14 at 3014.
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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"Indices Spread Trading Markets Lower on Eurozone Sovereign Debt Worries" last update by AG, 30-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.
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