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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 29 Oct 07
Trading News - Last Week's Markets
Poor economic data from the US increased the likelihood that the US Federal Reserve will cut interest rates by 0.25% next week. This, together with some good company results helped equities recover from a poor start on Monday. The Dollar continued to fall as oil and gold hit new highs.
The sub-prime crisis continued to make headlines with Merrill Lynch reporting a $2.3bn loss for Q3 and warning that there might be further write-downs at a later date.
Countrywide Financial accompanied their Q3 loss of $1.3bn with an upbeat statement and was rewarded with a 17% rise in the share price.
Indices Spread Bets
The FTSE rose by 2.0%, Dow +1.6%, S&P +1.7% and Dax 0.8%. In Asia the Hang Seng hit a new record high but Japan fell 1.8% on the week.
Equities Spread Bets
In Europe, France Telecom, Pearson, Home Retail, BP and Shell all beat estimates. In the US, American Express, Apple, AT&T, Dupont, Microsoft, Motorola and UPS all gave favourable reports. Figures from Amazon, Electrolux, Glaxo and Schering Plough all failed to match expectations.
Anglo Irish dropped 6% to a new low for the year as a large block of shares went through the market. Elan produced good Q3 results with strong revenues reducing losses, but Trinity Biotech disappointed with poor revenues driving down profits.
In M&A Nike bid for Umbro, Scottish & Newcastle rejected advances from Carlsberg and Heineken and the phoney war in Resolution ended with competing bids from Standard Life and Pearl.
Forex Spread Bets
The EUR/USD climbed to a new high of $1.44 on Friday and the EUR/GBP rate returned above £0.70. Sterling rose marginally to finish the week at $2.0520.
Gold Spread Bets
Gold continued to benefit as a hedge against the weakening Dollar, rising $17 to $778 as speculators accumulated record long positions.
Oil Spread Bets
Geopolitical concerns together with poor inventory reports sent oil to new highs, breaking $92. Brent Crude ended the week up $5 at $88.70.
Bonds and Interest Rates Spread Betting
UK government bonds were broadly unchanged on the week.
Spread Bets - Economic Indicators and Company Results
Due to the clocks in Europe going back an hour US data will be an hour earlier to us for a week.
Watch out for the double whammy from the US; on Wednesday the Federal Reserve is expected to announce a 0.25% cut in interest rates, but may go for a ‘ballsy’ 0.5% cut. This will either delight markets or scare the hell out of them.
Friday sees the release of US Payroll numbers, which usually guarantee a bit of excitement in the markets.
EU CPI data on Wednesday will confirm that inflation remains well above the target level of 2%. Look out for quarterly figures from several of the big names including Deutsche Bank, Astra Zeneca and BG Group.
Monday - Bank Holiday in Ireland (markets open)
Economic indicators
UK: 09.30 Money Supply (final)
Results
US: Kellogg, Pitney Bowes and Verizon
Tuesday
Economic indicators
EU: 09.00 German Unemployment
US: 14.00 Consumer Confidence
Results
UK: Imperial Tobacco finals, Booker interims, Friends Provident and Wolfson Microelectronics quarterly, Schroder trading statement
Wednesday
Economic indicators
UK: 10.30 GFK Consumer Confidence
EU: 10.00 Consumer, Business and Industrial Confidence figures, 11.00 CPI and Unemployment
US: 12.30 GDP and Core PCE, 14.00 Construction Spending, 18.15 FOMC Interest Rate decision
Results
UK: Tate & Lyle interims, TUI Travel trading statement
EU: Deutsche Bank, Continental
US: Kraft Foods, Mastercard
Thursday
Economic indicators
IRE: 08.30 Manufacturing PMI
UK: 9.30 Manufacturing PMI
EU: 09.00 Manufacturing PMI
US: 12.30 Weekly Jobless, Personal Income & Spending, Core PCE, 14.00 ISM Manufacturing
Results
IRE: Amarin Corp
UK: Astra Zeneca, BG Group, BAT, ICI, Shire Pharmaceutical, Smith & Nephew and Unilever quarterly, Taylor Wimpey trading statement
US: Eastman Kodak, Exxon Mobil and Sprint Nextel
Friday
Economic indicators
UK: 09.30 Construction PMI
US: 12.30 Non-Farm Payrolls, 14.00 Factory Orders
Results
UK: BSkyB and British Airways quarterly, BSkyB agm
US: Chevron, CIGNA and International Paper
The Financial Press, what the papers said:
Equities
Whilst most papers concentrated on the move by JC Flowers for Northern Rock the Sunday Times reveals that the private equity group Cerberus has the firepower of GMAC behind it. GMAC used to be the financial arm of General Motors and has assets of over $287 billion.
The Independent reckons that Pearl played the better game of chess and has outmaneuvered Standard Life in the contest to buy Resolution. In addition to offering a higher price Pearl’s shareholding in Resolution is enough to make the 75% required for Standard Life’s bid to succeed, almost impossible to for Standard Life to get.
The Sunday Times reports on the efforts of Delta Two in trying to raise emergency funds to cover their bid for Sainsbury’s. This is to cover the possibility that the Qatari Investment Authority might refuse to stump up the whole amount. The QIA are set to vote on the request to underwrite the £6 billion lending facility and inject £500 million to satisfy pension fund requirements this week.
The Sunday Business reports that despite an increase in surcharges Aer Lingus is set to increase capacity on its new route to San Francisco. This extra capacity looks to be at the expense of the Dubai route that is likely to be scrapped next year.
Forex
The Telegraph reminds us that the fall in the US Dollar is worth taking seriously; the Euro zone’s total GDP is slightly bigger than the US, but much of its growth is dependent on exports. This makes an exchange rate of $1.44 pretty dire news.
Interest Rates
The Observer makes the point that the worsening economic situation in America might just persuade the Federal Reserve to cut rates by 0.5% on Wednesday.
A fortnight ago it was reasonable to expect rates to remain unchanged but a further fall in house prices and the rising cost of petrol has made for a gloomier outlook
"Spread Bet Online" written by RThomas, last updated 29-Oct-2007
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