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SpreadBets.org.uk - Weekly Comment Supplied and Sponsored by paddypowertrader.
Part 1 - Trading News - Last Week's Markets
Part 2 - Economic Indicators and Company Results
Part 3 - The Financial Press, what the papers said
Weekly Online Spread Bet Comment, update 5 Nov 07
Trading News - Last Week's Markets
We'll have to start calling this the Weekly Echo. Once again the week ended with record highs in oil, gold and EUR/USD as sub-prime jitters returned to take the gloss off the equity markets.
The US Federal Reserve delivered the expected 0.25% cut in interest rates to 4.5%, but ruined the party by saying they attached equal weight to the risks of higher inflation and slower growth. Everyone read that as "don't expect further rate cuts unless something changes".
Although US GDP for the third quarter was a surprisingly strong 3.9%, US Consumer Confidence hit a two-year low.
On Thursday fears that Citigroup might have to cut its dividend to meet its capital ratio requirements smashed the banking sector. Further concerns over banks' exposure to bad loans and consequently their reluctance to lend to other banks led to the Fed's injection of $41bn to ease pressure on the money markets; the largest amount since September 2001.
Indices Spread Bets
The Hong Kong and Indian exchanges reached new highs at the start of the week, but equities finished on a low note with FTSE –2.0%, Dow –1.5%, S&P –1.7% and Dax –0.3%. The Nikkei held up better at +0.1%.
Equities Spread Bets
Having only recently broken through $600 Google broke through $700 per share for the first time.
Company results were mixed, with BG, BAT, Chloride Group, Schroders and Unilever all pleasing investors, but poor results from Exxon Mobil, Imperial Tobacco, Michelin, Proctor & Gamble, UBS and US Steel having a greater effect on the market.
Forex Spread Bets
The EUR v USD hit further highs, finishing the week at $1.4510. Sterling reached $2.0897, a 26-year high, and improved against the Euro to £0.6960.
Gold Spread Bets
Further weakness in the Dollar and uncertainty in equity markets saw gold power through the $800 level to a 28-year high of $807.30.
Oil Spread Bets
A second consecutive week of falling inventory figures helped oil to a new high of $96.24 on Wednesday. Brent Crude finished the week up over $3 at $92.08.
Bonds and Interest Rates Spread Betting
UK government bonds were barely changed on the week.
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Spread Bets - Economic Indicators and Company Results
Week Commencing 5 Nov 07
The emergency board meeting held by Citigroup this weekend (announced after hours on Friday) will ensure that focus remains on the financial sector's exposure to bad loans, and probably weaker equity markets.
Interest rate announcements are due on Thursday in both Europe and the UK. No changes are expected but if the banking crisis develops it might force the hand of the Bank of England in particular.
Monday
Economic indicators
UK: 09.30 Industrial and Manufacturing Production, Services PMI
IRE: 08.30 Services PMI
EU: 09.30 Sentix Investor Confidence
US: 15.00 Non-Manufacturing ISM
Results
UK: Logica
IRE: Ryanair
US: Sun Microsystems
Tuesday
Economic indicators
UK: 11.00 BRC Sales Monitor
EU: 09.00 Services PMI, 10.00 Producer Prices and Retail Sales, 11.00 German Factory Orders
Results
UK: Associated British Foods finals, Marks & Spencer and Yell Group interims, Intercontinental Hotels and Liberty International quarterlies, JD Wetherspoon trading statement
EU: BMW, Bayer and Puma
US: El Paso, Office Depot and Valero Energy
Wednesday
Economic indicators
UK: 10.30 BRC Shop Price Index
EU: 11.00 German Industrial Production
US: 13.30 Productivity and Unit Labour Costs, 15.00 weekly oil inventories
Results
UK: 3i Group, Firstgroup and Vedanta Resources interims, Scottish & Newcastle and Tomkins quarterlies
EU: Carlsberg and Commerzbank
US: AIG, Cisco Systems, Devon Energy, Sara Lee and Time Warner
Thursday
Economic indicators
UK: 12.00 Bank of England interest rate announcement, 15.30 Leading Indicators
IRE: CPI and Construction Employment
EU: 12.45 European Central Bank interest rate announcement followed by press conference at 13.30
US: 13.30 weekly Jobless. 15.30 Leading Indicators
Results
UK: Punch Taverns finals, Carphone Warehouse, Man Group and Wincanton interims, BT, International Power, Invensys, Invesco and Old Mutual quarterlies, Rentokil trading statement
EU: TUI Travel trading statement
US: Ford Motor, General Motors, Marsh & McLennan, Rockwell and Walt Disney
Friday
Economic indicators
UK: 09.30 Trade Balance
IRE: Industrial Production, Public Sector Employment and Earnings
EU: 07.45 French Industrial Production and Trade Balance
US: 13.30 Trade Balance, 15.00 University of Michigan Confidence
Results
UK: Electrocomponents and Hornby interims
EU: Allianz
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The Financial Press, what the papers said:
Last update: 5 Nov 07
Equities
The Observer reports on difficulties in the Sainsbury bid saga. With Thursday's deadline looming there is apparently opposition in Qatar to the granting of the additional £500m needed to secure the takeover, though the paper still expects a deal to be struck. The Sunday Times seemed less certain of the outcome, though it did refer to a letter from the Qatari emir six weeks ago confirming his full support and backing. The paper adds that Delta Two are considering asking the Takeover Panel for a one-week extension in order to sort out the financing.
Still on the take-over front The Sunday Times reckons that Standard Life are seeking agreement to change the terms of their offer for Resolution, requiring only 50%, rather than 75%, acceptances. They would look to combine this with a higher offer than the existing one worth 711p per share.
The Sunday Business Post reveals that Elan boss, Kelly Martin, is being tipped to replace the recently 'retired' boss of Merrill Lynch. Martin was previously at Merrill's back in 2001
The Sunday Times brings good news for Vodafone; the Company is deemed to be the front-runner to buy a 25% stake in the state controlled Telecom Malaysia's mobile phone subsidiary. This would fit in with Vodafone's plans for diversifying into the less developed parts of the globe.
Interest Rates
There was plenty of doom and gloom in the press, focusing on last week's turmoil in the banking sector. The Observer typifies the sentiment though doesn't bring anything new to the party. The Telegraph challenges the Federal Reserve's assertion that it is not looking to cut rates again, stating that it's clear that the banking crisis is far from over and it's not a question of 'if' but 'how soon' they will cut rates to 4%.
The Independent expects Marks & Spencer boss Stuart Rose to use Tuesday's results to warn of a slowdown in high street spending and call for a cut in UK interest rates.
SpreadBets.org.uk - Weekly Comment Supplied and Sponsored by paddypowertrader.
For the latest update see: Online Spread Bet
"Online Spreads" written by RThomas, last updated 05-Nov-2007
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