Spread Betting 10 Mar 2010
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For today's update see Spread Betting.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 10 March 2010
The FTSE 100 has maintained the week's lacklustre pattern on Wednesday morning, with little direction either way so far.
At 10am the UK's blue-chip index had edged 7.24 points (+0.13%) higher to 5609.54, while the mid-cap FTSE 250 had gained 34.21 points (+0.35%) to 9808.89.
So far this week, the FTSE 100 gained seven points on Monday before a four-point slide on Tuesday. The relatively lifeless movement today follows a similar pattern across the Atlantic, where the Dow added 12 points to close last night at 10564.38, and also in Asian markets, where the Nikkei 225 gained just 0.01% to 4829.8.
Across the major European markets it is a similar scenario so far. At just after 10am in London the German DAX was up 13.77 points (+0.23%) at 5899.66, while in France the CAC 40 had risen 11.45 points (+0.29%) to 3921.46.
Standard Life, the latest insurer in the spotlight, was an early blue-chip riser after releasing better-than-expected annual numbers this morning.
At 9.20am it had climbed by a modest 0.2p to 204.40p after reporting operating profit of £919 million, a drop of just 1.5%. The figure was ahead of consensus estimates and was largely attributed to the performance of its Asian businesses.
The insurance giant also revealed that it had made significant savings by cutting costs, with £47 billion out of a £75 billion two-year cost-saving target already met since the beginning of 2009. [1]
Staying in the financial sphere, Northern Rock this morning revealed it has made significant inroads into 2008's £1.36 billion loss, reporting a £257.4 million loss for last year. The nationalised bank, likely to be sold later in the year, termed the much-reduced year-on-year deficit as 'good progress'. [2]
The financial sector is in fact supplying the major boost for the FTSE this morning, with the top three spots taken by ICAP, which has added 5.39% or 19.1p to 373.70p, Royal Bank of Scotland Group (+ 4.08% to 40.57p) and Lloyds Banking Group (+2.8% to 54.67p).
Tullow Oil fell 8p (-0.6%) to 1273p after unveiling a 92% drop in annual net profit to £19 million, though this was still ahead of estimates. The oil exploration giant blamed weaker crude oil prices and a general output slowdown.
Meanwhile Prime Minister Gordon Brown confirmed today that this year's UK Budget will be held in 'two weeks time'. The announcement is timely following this morning's Office for National Statistics data which showed that UK industrial output for January fell by 0.4% against December's figure.
The disappointing figure, in contrast to widespread expectations for a 0.3% rise, was attributed to the severe cold weather that gripped the country earlier this year. [3] Manufacturing output also dropped, by 0.9% month-on-month, reinforcing the tentative nature of the UK's economic recovery as it struggles to emerge from the recession.
Looking ahead to US later, though there is little in the way of company reporting, keep an eye on February's monthly Budget statement at 7pm (London time).
Source: [1] BBC website (10 March 2010)
Source: [2] BBC website (10 March 2010)
Source: [3] BBC website (10 March 2010)
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 10 March 2010: 6am Update
Overnight, US stocks advanced on the anniversary of the bear market bottom, although they did finish well off their intraday highs.
Since the low last year, the Dow Jones Industrial Average has risen 61.2%, the S&P 500 68% and the NASDAQ 84%.
For the session, the NASDAQ was the top performer, adding 0.4% while the S&P 500 gained 0.2% and the Dow Jones Industrial Average 0.1%.
US market performance since the March lows has mirrored a pattern thematic of every bull market since 1949.
Research reveals that in a rally’s first year, traders generally express their optimism or confidence by buying into the more risky small cap stocks. As a result, the average first-year gain for small caps is at 48%, while the large caps on average gain 32% [1]. In the second year, small caps have returned 22% on average, while the large-caps rose 15%.
Given this, historical averages suggest markets could see good upside potential from these levels. Also, the breakout seen on the Dow Jones Transportation Index is a very bullish sign, being typically a good indicator for Wall Street’s near-term outlook.
Across Asia, regional markets are mixed after a modest set of leads from Wall St and stronger-than-expected import data from China. As at 05:15, the Hang Seng is the best performer, up 0.2% while the Nikkei, Shanghai Composite and Kospi are all weaker in the range of 0.1% and 0.5%
In Australia, the ASX 200 closed flat at 4820 having traded as high as 4837.6 and as low as 4804. Defensive sectors came into play as investors appeared to rotate out of the cyclical names that have pushed the market higher in recent weeks.
Having been up for eight consecutive sessions, the market is beginning to trade as many suspected it might. It looks tired and a little overstretched in the short term, so a breather and consolidation certainly looks likely. This coincides with US markets reaching the top of their trading ranges as well.
While a consolidation period is expected over the next week or so, it appears the bulls are certainly in control of the market. A number of global indices have already broken out, so even the slightest sniff of a bullish catalyst could see the ASX propelled to new post-GFC highs. The question is, which sector will lead us higher?
Given the uneventful trading across Asia, we’re looking at the prospect of a rather muted opening in Europe as a result. There was however a sense that London perhaps underperformed yesterday, a theme that may yet continue.
This was not only because the miners and banks took their toll on the FTSE’s fortunes but also due to that surprise expansion in the trade deficit which is giving cause for concern, especially given the somewhat depleted state of Sterling.
Expect the industrial production data from London to be closely watched this morning as ongoing recovery here will be key in closing the trade gap as well as stimulating wider recovery.
There’s also German CPI data due for release in the coming hours.
As for earnings, Standard Life’s numbers will doubtless attract attention and could provide momentum for the finance sector as a whole, and Tullow Oil is also awaited and will put another of the heavyweight sectors into focus.
Ahead of the open however, we’re calling the FTSE down 6 at 5596, the DAX up 3 at 5889 and the CAC up 2 at 3912.
Source: [1] Standard & Poor’s equity research
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 10 Mar 2010" last update by AG, 10-Mar-2010
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