Spread Bet on UK Markets
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SpreadBets.org.uk - Weekly Comment Supplied and Sponsored by paddy power trader.
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Weekly Online Spread Bet Comment, update 10 Mar 08
Part 1 - Trading News - Last Week's Markets
Part 2 - Economic Indicators and Company Results
Part 3 - The Financial Press, what the papers said
Trading News - Last Week's Markets
Just when it looked safe to relax, after the banks' reporting season had finished, the credit crunch reared its ugly head with a vengeance. Further problems in the corporate debt market led to a spate of margin calls and the forced sale of investments by hedge funds. Money market rates in Europe and the UK rose to their highest levels this year and credit spreads continued to widen.
In the US, record loan delinquencies and the worst employment numbers in 5 years resulted in the Federal Reserve increasing the scale of emergency funding. As markets priced in a 0.75% cut in US rates at the March meeting the Euro, gold and oil all hit record highs.
The main equity indices in the US and Europe fell by around 3% with the Dax faring slightly worse at -3.5%. However, the Far-Eastern markets suffered the additional worry of a strong Yen hitting their export markets. The Nikkei fell by 6% and the Hang Seng dropped 7.5%.
Equities Spread Bets
Perhaps it's a sign of lower expectations, but several companies impressed with better than expected results. Pearson, Schroders, John Lewis and F&C all shone, but decided now was a good time to issue cautious outlooks.
The building sector, through Balfour Beatty and Taylor Wimpey, combined excellent results with optimistic outlooks, but it's probably too late to save the latter from relegation to the FTSE 250 Index.
High flyer of the week was Premier Foods; despite cutting the dividend, as forecast, the company announced successful negotiations to ease concerns over their banking agreements. The shares rose 14% on the week.
UBS shares fell 12% on talk of the sale of a mortgage portfolio for a lot less than its current value. Investors in monoline AMBAC were pleased that a deal for additional funding had been struck, until they found out that they were the ones providing the funding! The shares fell 14% on the announcement of a $1.5 billion rights issue.
Paddy Power pleased investors with a 59% rise in full-year profits and plans for further expansion.
Forex Spread Bets
Following predictions that US rates could fall below 2% this year the Dollar fell to $1.5340 and $2.0140 against the Euro and Sterling respectively. The Euro also reached a new high against Sterling, though profit taking saw it end the week at £0.7620. Risk aversion trades helped the Yen to an 8-year high of Y101.44 against the Dollar.
Gold Spread Bets - Crude Oil Spread Bets
Commodities continued to rise, with Crude Oil spreads and Gold hitting new highs as the week progressed. Gold stopped just short of the magic $1,000 level, touching $991 before consolidating around the $975 level, a $5 rise on the week. Nymex Oil touched $106.54 for the first time, but retreated from record levels ahead of the weekend. Brent Crude finished at $102.38, up $2 on the previous week.
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Spread Bets - Economic Indicators and Company Results
Week Commencing 10 Mar 08
Monday
Economic Indicators
UK: 09.30 Producer Prices, Industrial and Manufacturing Production
EU: 07.00 German Trade Balance, 07.45 French Trade Balance and Industrial Production
US: 14.00 Wholesale Inventories
Results
UK: Bovis Homes, BRIT Insurance and Parkwood finals
IRE: Grafton final
US: Blackstone Group
Tuesday
Economic Indicators
UK: 00.00 BRC Retail Sales, 15.30 Leading Indicator
EU: 10.00 German ZEW Economic Sentiment
US: 12.30 Trade Balance
Results
UK: AMEC, Antofagasta, Cookson, Friends Provident, Greggs, Hill & Smith, John Menzies, Trafficmaster, Tullett Prebon and Weir Group finals
EU: Audi
Wednesday
Economic Indicators
UK: 09.30 Trade Balance, 12.30 Budget
IRE: 11.00 Industrial Production and Retail Sales
EU: 10.00 Industrial Production
US: 14.30 Oil Inventories
Results
UK: BPP, Costain, FCUK, Lookers, Tullow Oil, Standard Life and Yule Catto finals
IRE: Aer Lingus finals
Thursday
Economic Indicators
IRE: 11.00 CPI
US: 12.30 Retail Sales and Weekly Jobless, 14.00 Business Inventories
Results
UK: Dignity, Legal & General, Morrisons and Premier Oil finals, Home Retail trading update
Friday
Economic Indicators
EU: 07.00 German CPI, 10.00 EU CPI and Labour Costs
US: 12.30 CPI, 14.00 University of Michigan Consumer Sentiment
Results
UK: Collins Stewart, Flying Brands and Prudential finals, Carnival quarterly
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The Financial Press, what the papers said:
Last update: 10 Mar 08
A large part of the UK press over the next 7 days will be devoted to Wednesday's UK Budget. How the man with the curiously mis-matching eyebrows deals with his predecessor's poison pill (the state of the UK's accounts) is a welcome distraction from the turmoils of the markets.
The Sunday Times expects Darling to claw back revenues by turning green and also hit the nation's binge drinkers. By contrast the Independent focuses far more on the economics and in particular the future role of the UK housing market.
The Sunday Business Post previews the likely relegation candidates from the FTSE 100 premier league. The paper expects the quarterly review, based on Tuesday's closing prices, to chuck out Taylor Wimpey, Rentokil and Yell. Possible replacements are Tate & Lyle, Bunzl and Eurasian Natural Resources.
If you're long of housebuilders don't read the Observer on a full stomach. A gloomy, but interesting, piece blows the icing off the recent well-received results from Taylor Wimpey and highlights a Pandora's Box of concerns for the sector in general. These concerns centre mostly around too much debt, not enough sales and badly timed acquisitions.
Here's a welcome good news article. The Sunday Times expects Morrisons to announce bumper full-year results with a minimum £500 million share buyback thrown in for good measure. This is all likely to tie in with Sir Ken Morrison stepping down after 40 years at the helm.
As regular as 3 tons of useless supplements and a feature on the demise of English rugby is the weekend article on bank write-offs. The Telegraph reckons Europe's top banks could be in line for a further £34 billion of write downs as the credit crisis hits a new phrase. This is largely based on UBS's firesale of an ALT-A mortgage portfolio at 70 cents in the Dollar. The paper argues that sub-prime loans can no longer be valued at the 75 cents in the Dollar carried by European banks.
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"Spread Bet on UK Markets" written by paddy powe, last updated 10-Mar-2008
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