RBS Share Spreads Market up 3 Percent as Bank Sells off Its Pub Group
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 2 December 2011: 11.00am Update
The FTSE 100 started the final day of the trading week firmly in positive territory, as financial spread betting investors continued to hope that Eurozone leaders are finally groping their way towards a solution.
However, the prospect of monthly non-farm payrolls data from the US meant that caution was still in evidence.
By 10.30am (London time), the FTSE 100 was up 1.67% at 5580.95, while the FTSE 250 was 1.12% higher at 10,317.82. European markets were also strongly higher on hopes of progress in the Eurozone.
Markets continue their dramatic turnaround
Only last week, the FTSE 100 was on course for its longest losing streak since 2003. Now, it appears we are heading for the best week for global markets since 2009. Markets have rallied once more this morning, and as usual Eurozone hopes are behind the charge higher.
The FTSE 100 added around 90 points this morning before dropping back slightly, buoyed by Delphic comments from ECB head Mario Draghi.
However, an element of caution still persists; investors are hoping that this afternoon's all-important US non-farm payrolls figures will show strong job growth, but they are unwilling to get too carried away before the news emerges.
Eurozone hopes on the rise again
It would appear that Mario Draghi is the chief reason for the rally today. Last night Mr Draghi hinted at the possibility that the ECB would be prepared to undertake a more aggressive course of action in the Eurozone crisis, if (and this is of course a big if) governments did all in their power to reassure investors about fiscal consolidation.
This is one of the possible solutions to the crisis (the other being eurobonds), although Germany's opposition to any deal of this kind is well-known. Either way, the ECB and Berlin are playing a dangerous game of brinksmanship, with the world hoping that one of them will blink first.
It still doesn't look as if that person will be Angela Merkel however. The new 'Iron Lady' has already spoken to the Bundestag this morning, saying that she continued to oppose an active role for the ECB.
However, traders seem to have opted to ignore this, focusing instead on her reference to work on a closer fiscal union for the Eurozone. She said that new budget discipline was required, and this is the sort of effort that commodities spread betting markets have been hoping for.
Nonetheless, we have been here many times before, and while the 9 December summit is being billed as the one that will save the euro, I feel compelled to agree with the chancellor when she says that the process of solving this crisis, which has been 11 years in the making, will take a long time yet.
RBS flogs its pubs
It would appear that the empire-building of RBS knew no bounds. This morning we learn that the bank has sold off its pub group Galaxy to a subsidiary of the Dutch brewer Heineken for £422 million.
Quite what a major bank was doing owning so many pubs is beyond me, but the disposal marks a sensible return to a purer banking business. RBS shares were up 3.3% at 21.23p.
US pre-market
US futures are currently significantly higher, with the Dow forecast to open up around 118 points, while the S&P 500 is expected to start up 14 points.
However, all depends on the non-farm payrolls data at 1.30pm (London time). 125,000 jobs are forecast to have been added in November, up from 80,000 a month ago. The unemployment rate however is forecast to remain unchanged at 9%.
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 2 December 2011: 5.00am Update
US markets were modestly weaker overnight, taking a breather after this week’s strong move higher.
With spread betting markets having put on significant gains over the past seven days, it is not surprising to see them consolidate. Investors also seem to be exercising some caution ahead of tonight’s US monthly jobs report.
Unemployment claims came in worse than expected, but the US manufacturing PMI number came in at 52.7, beating expectations. November manufacturing expanded at the fastest pace in five months.
Among the major averages, the Dow Jones Industrial Average shed 0.2% to end at 12,020. The S&P retreated 0.2% to 1245, while the NASDAQ added 0.2% to close at 2626.
Financial stocks had a tough session after a Massachusetts’ attorney general sued some of the big banks, including Bank of America, JP Morgan and Citi, alleging deceptive foreclosure practices.
Asia & Australia
Regional markets across Asia are mixed, with the ASX and Nikkei stronger but the Hang Seng and Shanghai Composite weaker. It has been a fairly muted session, with markets taking a breather after the massive gains posted this week. Investors seem to be waiting for the next catalyst after the rallies we saw this week were the major headlines.
Regardless, Asian markets are on track for big weekly gains, with the Aussie market currently up 6.5% for the week.
For the day, the ASX 200 is leading the gains in the region, with a 0.3% rise led by the defensive consumer staples and healthcare sectors. The Nikkei is up 0.2%, while the Hang Seng is down 0.3% and the Shanghai Composite 1.2% lower.
In light of the mixed trading and tight ranges in the Asian session, US markets are pointing towards a flat open. However, after having been much lower than other regions overnight, European markets look likely to produce modest gains at the open.
Europe
Tonight the market will be keen to hear what German Chancellor Angela Merkel has to say. German Finance Minister Wolfgang Schaeuble floated the idea of an off-balance sheet fund, however his proposal fell short of joint issuance of bonds (eurobond).
There is also a positive buzz around trading floors at present after ECB President Mario Draghi signalled that the ECB was open to acting more aggressively, provided European leaders impose the required fiscal discipline.
This opens up the potential to see the ECB setting explicit targets for bond yields, and whilst they will continue to sterilise bond purchases - effectively stopping short of QE - the end game is to instil enough confidence in the bond market that sovereigns can fund their deficits in 2012 at better levels.
Traders will also be looking at tonight’s US non-farm payrolls with expectations of 125,000 jobs created in November. US data has been steadily improving and has rightly taken a backseat to Europe, but it must be said that expectations are high with traders looking to see a number above 125,000.
In the UK, traders will be looking out for construction PMI numbers. Ahead of the European open we're calling the FTSE up 11 at 5500, the DAX up 19 at 6055 and the CAC up 13 at 3143.
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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"RBS Share Spreads Market up 3 Percent as Bank Sells off Its Pub Group" last update by AG, 02-Dec-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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