Shares Spread Betting: JD Sports Pushed Higher as Sales Growth Resumes
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 21 September 2011: 11.00am Update
The FTSE 100 struggled to establish a firm direction this morning, oscillating between gains and losses as markets awaited the outcome of the current Federal Reserve meeting.
Both positive and negative moves were limited, with spread betting investors unwilling to make significant changes ahead of what could be a major policy announcement.
By 10.45am (London time), the FTSE 100 was down 0.1% at 5358.06, while the FTSE 250 was 0.32% higher at 10,341.50.
Markets on hold for Fed meeting
The great day has finally arrived. Since the end of August, when Ben Bernanke kept everyone on edge with his sibylline utterances at Jackson Hole, markets have looked forward to the September meeting of the Federal Reserve.
Unlike most meetings, this one lasts two days, giving policymakers more time to discuss (or argue) over the range of policy options open to them. Since the end of August, information has leaked from the Fed, providing markets with the likely outcome of the meeting.
At present, it seems as if full-blown QE3 is off the cards, with ‘Operation Twist’ (see yesterday’s report for a fuller explanation) the most likely result.
However, ‘Helicopter Ben’ has surprised markets before and he may do so again this afternoon. The Fed’s decision will be announced at 7.15pm (London time).
Bank of England warming to QE2
At first glance, financial spread betting markets took fright at the latest set of Bank of England (BoE) minutes, with the FTSE 100 slipping further into the red, since the conclusion of the meeting showed that Adam Posen remained the sole dove on the committee.
However, a closer look at the account of the meeting showed that policymakers were actually beginning to warm to the idea of more quantitative easing for the UK, although it would seem that the worsening economic situation was the cause of the shift in thinking, rather than Adam Posen’s stirring oratory.
The minutes showed that committee members now thought that the decision to hold fire for the moment on more asset purchases was ‘finely balanced’, and that more intervention would be justified if the economy continued to struggle.
The committee echoed Monday’s report from the BoE, which undertook a vigorous defence of the benefits of QE, in saying that asset purchases would continue to be an effective tool in loosening monetary conditions.
The BoE also mimicked its cousin in the US with comments that other policy options remained open, such as lowering the interest rate below 0.5% or changing the makeup of its asset portfolio.
The news that the bank stood ready to intervene again if needed sent sterling lower, although the understandable lack of explicit guidance on when more QE might arrive allowed Sterling/Dollar to recover some of its losses during the morning.
JD Sports sees hope for the future
In shares spread betting JD Sports rose 1.4% to 852p after a first-half report that showed sales growth had resumed following a difficult start to the financial year. Like-for-like sales were down 1.6% for the first six months of 2011, but had then grown 3.3% since the end of the period.
The acquisitions of chains in Ireland and Spain helped to boost revenue, but JD cautioned that trading conditions were still tough and that much depended on the performance of the company during the crucial December and January period.
The results helped to lift smaller rival JJB Sports by 2.4% to 18.9p, although Sports Direct edged down 0.5% to 228.8p.
US pre-market
US futures have been through a choppy morning, residing both in positive and negative territory. However, at present futures for both the Dow and S&P 500 are up 0.4%. Data on existing home sales in August is published at 3pm, but the main event remains the Fed decision at 7.15pm (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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"Shares Spread Betting: JD Sports Pushed Higher as Sales Growth Resumes" last update by AG, 21-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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