Spread Betting 11 Mar 2010
|
|
|
For today's update see Spread Betting.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 11 March 2010
The FTSE struggled to move into positive territory this morning, after a bigger than expected rise in China's inflation rate led investors to speculate that it will tighten monetary policy.
China's National Bureau of Statistics today reported a 2.7% year-on-year gain in the country's consumer prices in February.
This exceeded the 2.5% median gain shown in a Bloomberg survey and was closer to China's 3% target for inflation. The government organisation also said that China's industrial production rose 20.7% in the first two months of 2010, the most in more than five years.
The way things are going it seems as though China's inflation rate may top the 3% target very soon, prompting the country’s central bank to raise rates.
In my opinion this development is not really surprising. Yesterday's exceptionally robust trade report from China, which showed bigger than expected 46% year-on-year surge in exports in February, was a clear inflationary signal.
The potential for additional monetary tightening in China in the near term is bearish for commodity demand because tightening aims to slow construction activity, which would then dampen demand for commodities, especially copper.
'The stronger than expected CPI numbers out of China this morning raise the prospect of a 27 (basis point) rate hike by end-Q1, which would move policy further away from a super-loose stance to a more accommodative one. This could weigh on commodities markets in the near term which would be bearish for gold,' warned David Barclay of Standard Chartered today. [1]
Unsurprisingly, commodity prices retreated today, with May high-grade copper futures down 0.4% to $3.356 per pound, April gold futures 0.2% lower at $1106.2 per troy ounce and April light sweet crude 0.1% lower to $82 a barrel.
Miners took the most points off the blue-chip index, consequently, with the likes of Randgold Resources, BHP Billiton, Rio Tinto, Lonmin, and Fresnillo all down by over 1.5% so far.
The only miner to buck the negative trend was Antofagasta, which climbed 0.7% to 1026p on the back of broker upgrades from Goldman Sachs and Deutsche Bank.
Energy majors were lower, with the likes of BG Group, Tullow Oil and BP down between 0.3% and 1%.
BP fell despite announcing a $7 billion (£4.7 billion) deal to acquire oil and gas assets from Devon Energy. The transaction would give BP the opportunity to enter the deep waters off the coast of Brazil, one of the world's most promising areas for oil exploration.
Banks were mixed, meanwhile, with Lloyds Banking Group advancing 1.9% to 56.33p and Royal Bank of Scotland up 0.8% to 40.73p while HSBC and Standard Chartered were 0.4% and 1% lower at 703.5p and 1716p respectively.
In contrast life insurers were predominantly higher, with the exception of Old Mutual, which declined 2.3% to 120.7p. The insurer fell on the back of plans to dispose of it life business and partly its US asset management operations.
Elsewhere, Wm Morrision Supermarkets fell 1.7%, after saying it is cautious on consumer spending for 2010. The company did, nevertheless, unveil a sharp jump in full-year profits, which beat expectations.
The grocer's pre-tax profits surged to £858 million from £655 million the same period a year ago. In addition, turnover rose to £15.4 billion from £14.5 billion, while like-for-like sales (excluding VAT and fuel) climbed 6%.
Separately, Home Retail Group rose 1.9% to 272.8p after reporting fourth-quarter upwardly revising its full-year forecasts, saying it now expects underlying pre-tax profits for the year ending February 27 to come in at £290 million, beating consensus estimates.
By 10.50am (London time) the FTSE 100 Index was 9.77 points (-0.17%) lower at 5630.80 while the broader FTSE 250 was 5.63 points (-0.06%) below its previous close at 9859.66.
March Dow and S&P 500 futures were also lower, suggesting that Wall Street is currently expected to open in negative territory this afternoon.
Looking ahead, it is important to keep an eye out for the US jobless claims and trade balance data, due at 1.30pm (London time).
[1] Source: Reuters News (11 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.
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.
|
Spread Betting 11 March 2010: 6am Update
Overnight on Wall St, stocks finished below session highs as a decline in oil prices overshadowed an upbeat report on wholesale inventories and an improvement in the corporate bond market.
Once again, the NASDAQ 100 was the best performer, rising 0.8% while the broad-based S&P 500 rose 0.5% and the Dow Jones Industrial Average was flat.
Looking forward, participants still aren’t clear on where the market is headed. The market has rallied strongly from the recent lows but seems to be tiring. Traders can’t see where the next upside catalyst might come from.
While the recovery is heading in the right direction, there are still concerns surrounding its sustainability and whether it can stand on its own two feet when stimulus is withdrawn.
Across Asia, regional markets are mixed as they digest a slew of economic data out of China and Japan. Figures as at 05:15 suggested the Japanese economy grew at an annual pace of 3.8%, well below last month’s 4.6% preliminary number.
The Nikkei 225 is the region’s outperformer, higher by 0.6%; the Shanghai Composite and the Hang Seng are lower by 0.8% and 0.6% respectively, while the Kospi is weaker by 0.3%.
With the eyes of the world on the flurry of data from China, the initial reaction was relatively negative. Most analysts would say China increasing reserves is a show of strength and a prudent measure from an economy that has seen a flood of money help to push up prices in virtually all of their key asset classes.
However, today we saw solid numbers in Chinese fixed asset investment, increasing 26.6% and retail sales up 22.1%. Disappointingly, industrial production was up just 12.8%, falling short of economists’ forecasts.
What perhaps was looked at more closely though was China’s CPI data which grew 2.7%. This is a concern as their year-end target is 3%.
So while we may not see an immediate reaction from their current measures to increase reserves, we will need to keep an eye on next month’s CPI data.
If there is no improvement in this area, the authorities will invariably look to ramp up policy or even interest rates by 27 basis points.
With little discernable direction provided by the US yesterday, European markets seem likely to take their lead from a depressed mood in Asia.
With gold and oil prices stumbling too, this will heap downside pressure on the heavyweights in London as the session gets underway, but with another relatively quiet day for fundamentals, stocks could be left to drift a little in the near-term.
The US trade balance data will be closely watched, slowing consumption should be helping moderate this figure so anything to the contrary could see some of this recent USD strength being eroded as a result.
On the corporate front there are numbers due from Home Retail, WM Morrison and JD Wetherspoon which will once again give an updated snapshot of how the UK consumer is acting.
Ahead of the open we’re calling the FTSE down 18 at 5622, the DAX down 26 at 5911 and the CAC down 19 at 3924.
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.
|
"Spread Betting 11 Mar 2010" last update by AG, 11-Mar-2010
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.
Similar articles:
Spread Betting Daily - last update: 10-Feb-2012
Your daily spread betting update from the insiders. A look at the FTSE 100 and a range of other spread betting markets from Crude Oil to Shares to Gold to . . . read more Spread Betting Daily.
Spread Bets Daily Markets - last update: 09-Feb-2012
Spread Betting Daily News - A daily trading update from IG Index. Every weekday the experts offer their view of the markets . . . read more Spread Bets Daily Markets.
US Spread Betting Markets Trade Lower on Weak Home Sales Data - last update: 27-Jan-2012
In US trade, markets retreated from early highs after home sales data came in weaker than expected. The move saw US spread betting markets shed some of the . . . read more US Spread Betting Markets Trade Lower on Weak Home Sales Data.
FTSE 100 Spread Betting Market Rallies after US Intererst Rate Comment - last update: 26-Jan-2012
The Fed's decision to keep interest rates low for at least another two years while signalling the possibility of further QE reinstated the rally on the FTSE 100 . . . read more FTSE 100 Spread Betting Market Rallies after US Intererst Rate Comment.
Shares Spread Betting: Greek Concerns Calmed by Outstanding Apple Performance - last update: 25-Jan-2012
Very rarely will a single stock have such control on sentiment, but the numbers from Apple seem to have arrested the declining goodwill . . . read more Shares Spread Betting: Greek Concerns Calmed by Outstanding Apple Performance.
UK Shares Trading: Cheming Stocks Fall Despite Announcing Profit Growth - last update: 24-Jan-2012
Defence firm Chemring dropped 14% today despite announcing further profit growth, as UK shares trading investors fretted about possible additional reductions in defence . . . read more UK Shares Trading: Cheming Stocks Fall Despite Announcing Profit Growth.
Indices Spread Betting: FTSE 100 Opens Higher on Mining Stock Performances - last update: 23-Jan-2012
The FTSE 100 moved slightly higher this morning, held up by mining stocks, but the overall atmosphere remained nervous due to the absence of any . . . read more Indices Spread Betting: FTSE 100 Opens Higher on Mining Stock Performances.
Vodafone Spread Betting Market Rallies on Favourable Legal Ruling - last update: 20-Jan-2012
In UK shares spread betting, telecoms giant Vodafone rose 1.8% to 177.7p after reports that a court in India had overturned an earlier ruling against the company. The legal . . . read more Vodafone Spread Betting Market Rallies on Favourable Legal Ruling.
Shares Spread Trading: ASML Holdings Stocks Surge on Higher Q1 Order Forecasts - last update: 19-Jan-2012
The tech stocks were a standout after ASML Holdings, Europe's largest semi-conductor company, forecast higher first quarter orders and circuit . . . read more Shares Spread Trading: ASML Holdings Stocks Surge on Higher Q1 Order Forecasts.
Tullow Oil Sees Shares Plummet as Investors Ignore Positive Reports - last update: 18-Jan-2012
Tullow Oil dropped 6.6% this morning to 1358p, as investors ignored the report of a good 2011 and focused on delays to production at . . . read more Tullow Oil Sees Shares Plummet as Investors Ignore Positive Reports.
Spread Betting Daily Index - An index of Mid-Morning Daily Spread Betting Reports covering the key Index, Forex, Shares and Commodities markets.
|
|
|
Free Financial Email: Latest Spread Betting Offers and where to find narrow spreads.
Click here to sign up.
|
|
