Marks & Spencer Shares Rise on Optimism Over Store Revamps
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 8 September 2011: 11.00am Update
UK equities edged higher this morning as positive earnings news from the retail sector boosted indices spread betting investor confidence.
However, gains are likely to be capped ahead of monetary policy meetings at the Bank of England and the European Central Bank.
By 10.45am (London time), the FTSE 100 was marginally higher at 5360.51, while the broader FTSE 250 jumped 1.24% to 10,449.58 on the back of positive earnings from retailers.
Monetary policy meetings
At midday today, investors will turn to London and listen cautiously as the Bank of England is scheduled to release its interest rate decision.
Though markets are expecting the BoE to maintain interest rates at their record low of 0.5% for another month, it is unlikely that further steps will be announced to stimulate growth despite the growing risk of another recession.
Regardless of the slew of weaker UK economic data in recent weeks, MPC members still appear to prefer holding policy unchanged rather than loosening it further with more asset purchases. The minutes from today’s meeting will be released on 20 September.
Shortly after at 12.45pm (London time), the European Central Bank (ECB) is due to release their interest rate decision, with wide expectations that they will signal a change in policy direction.
Analysts are forecasting interest rate cuts in the Eurozone as early as November, in a sharp reversal of monetary policy expectations due to deterioration in confidence indices, inflation being above the 2% ECB target, and growing worries about Europe’s debt crisis.
Spread betting markets will also pay close attention to a speech by ECB president Jean-Claude Trichet at 1.30pm (London time).
Investors will press their ears to the ground and pay close attention to any comments on the ECB’s buying of southern European and Irish bonds, especially after Italy passed its new austerity measures last night in the upper house, with a final vote expected tomorrow by the lower house.
UK retail sector earnings
Shares in London added to yesterday’s rally as positive earnings news from the retail sector boosted market confidence.
Retailers found favour after slightly better-than-expected first-half results from WM Morrison, which reported that its like-for-like sales grew by 2.2%. WM Morrison’s share price jumped 3.6% higher to 300.5p.
Home Retail Group announced that its second-quarter trading was in line with expectations; its share price surge 9.8% to 130.5p.
Marks & Spencer was also among the top blue-chip risers as its share price increased 4.2% to 327.9p on optimism over plans to revamp its stores and on speculation about possible private equity interest in the stock.
US pre-market
US September futures pointed to a marginally higher open on Wall Street this afternoon, with S&P 500 futures trading 0.19% up at 1201.3 and Dow Jones futures 0.1% higher at 11,426.00 by 11am (London time).
Before the US market opens, investors will receive the latest US weekly initial jobless claims at 1.30pm (London time).
The market was also looking ahead to an important speech by US president Barack Obama at midnight (London time), where he is expected to outline a jobs plan to revive the faltering US economy.
Federal Reserve chairman Ben Bernanke will also give a speech at 6.30pm (London time) however markets do not anticipate that he will announce new measures to boost the US economy.
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 8 September 2011: 6.00am Update
In the US overnight, stocks rebounded strongly, posting their first gains for September as worries over the European debt crisis eased a little after Italy passed austerity measures and Germany voted in favour of participating in the EFSF.
Investors managed to shrug off some weakness from the Beige Book as it showed slower growth in some regions of the US.
The technology-laden NASDAQ was the best performer - rising 3% - while the Dow Jones Industrial Average and S&P 500 added 2.5% and 2.9% respectively.
Asia & Australia
Across Asia, regional markets are mixed despite the positive overnight leads from European and US markets. The rebound in stocks across the region lost momentum, however, as profit takers moved in ahead of key events this evening, including speeches from both Fed Chairman Ben Bernanke and President Obama.
The Hang Seng and Shanghai Composite are down 0.7% and 0.2% respectively, while the Nikkei 225 and Kospi are 0.1% and 0.3% firmer.
In Australia, the ASX 200 is currently flat at 4182, well below its early morning highs of 4218. Despite a highly positive session for European and US bourses, the Australian market has been unable to sustain yesterday’s momentum, with a much weaker-than-expected employment report the catalyst for the market to turn south.
On a sector-by-sector basis the financial spread betting market is mixed, with modest gains across the energy and industrial sectors more than offset by losses in the materials, financial and consumer sectors.
Looking ahead
Despite triple digit gains on both sides of the Atlantic yesterday, equity markets have failed to find much traction in Asia. This has left traders in something of a consolidation phase ahead of President Obama's key speech on job creation, due later in the session.
With much of the recent upside seen as coming from an expectation of further stimulus measures, it really is setting the scene for government and the central banks to start delivering against this. The clear risk is that failure to do so gives traders adequate opportunity to start taking money back off the table.
This would seem, however, to be a longer term prospect. More immediately, there are interest rate verdicts due in the coming hours from London and Frankfurt, although there's no expectation that any changes will be seen here.
The latest US trade balance data is also expected, whilst there's also a scattering of earnings news on the cards. Highlights here include UK retailers WM Morrison and Home Retail Group. Both are likely to be under close scrutiny after the downbeat numbers posted by sector peers yesterday, underlining the woes of the UK high street.
Ahead of the open we're calling the FTSE up 12 at 5331, the DAX up 26 at 5432 and the CAC up 15 at 3088.
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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"Marks & Spencer Shares Rise on Optimism Over Store Revamps" last update by AG, 08-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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