Spread Betting Markets Rise on Ben Bernanke Speech
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 30 August 2011: 11.00am Update
London equities surged this morning, catching up with yesterday's gains across the rest of the European stock markets, with banks leading the gains after a broker upgrade for RBS.
European equities however were more subdued after yesterday's rally.
CBI data released this morning showed business volumes in UK services sector companies fell at their fastest rate in the past quarter since November 2009. However the FTSE showed little interest as it continued to catch up to global stock markets after a day off yesterday.
Banks were boosted this morning as business lobbies stepped up their campaign against plans to force banks to ring fence their retail operations from other parts of their business, by arguing that banks should not be constrained at a time when the economy is growing so slowly.
John Cridland, director-general of the CBI, claimed that taking action now would be 'barking mad'.
The FTSE 100 jumped almost 3% upon opening and had settled 2.2% higher by 10.30am (London time) to 5243.20. The broader FTSE 250 was up 1.61% at 10,158.05, while Barclays and RBS both surged over 8% this morning to 170.00p and 25.00p respectively.
US data and Greek banks lift stocks
Equity markets continued on a high this morning after better-than-expected US consumer spending data boosted technology and automotive stocks yesterday, and eased concerns that the global economy may slip back into recession.
Personal consumption expenditure increased 0.4% in July compared to a 0.1% decrease the previous month.
Global stock markets also continued to build on last week's tentative recovery as spread betting investors found comfort in US Federal Reserve chairman Ben Bernanke's comments on Friday that the Fed may do more to support the stalling US economy, though not at present.
Market sentiment towards riskier assets was also helped yesterday by news of the merger between Greece's Alpha Bank and Eurobank. Many investors hope the move represents an important step away from the sense of crisis among banks on the periphery of the Eurozone.
European developments
In yesterday's trading session, Jean-Claude Trichet, head of the ECB, and Olli Rehn, the European Commission's economic chief, provided a boost to European markets and improved investor sentiment.
They insisted that neither bank liquidity nor capitalisation were a danger and revealed that the ECB had spent €6.6 billion buying Eurozone government bonds last week. Though the sum was significantly lower than the €14.3 billion spent the previous week, it was still one of the highest weekly figures since the programme was launched in May 2010.
Jean-Claude Trichet also announced the bank is reviewing the risks to price stability, suggesting the bank could tone down its view on inflation pressures and keep interest rates on hold well into next year.
Despite recent disappointing data, Mr Trichet said the Eurozone was not about to sink back into recession. Today's better-than-expected European consumer confidence data helped to support those comments.
As for the second Greek bailout package, Jean-Claude Junker, chairman of the Eurogroup, insisted he was confident that Eurozone countries will find ways to satisfy the demands for collateral from Greece for new loans to Athens by mid-September. The second bailout is scheduled to be finalised and approved next month on 21 September.
US pre-market
US stock futures pointed to a weaker open for equities on Wall Street this afternoon after steep gains in the previous session, as the IMF downgrades the outlook for US growth.
Futures for the S&P 500 and the Dow Jones are down 0.63% and 0.56% this morning, trading at 1200.50 and 11,453.00 respectively.
This afternoon US economic data includes the consumer confidence index at 3pm (London time) and minutes from the FOMC meeting due at 7pm (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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Spread Betting 30 August 2011: 6.00am Update
In the US overnight, stocks closed the session significantly higher as a better-than-expected personal spending report and less-than-feared damage from Hurricane Irene helped spur the buyers.
The technology-heavy Nasdaq was the standout performer, rising 3.3% while the S&P 500 and Dow Jones Industrial Average added 2.8% and 2.3% respectively.
Asia & Australia
Across Asia, regional markets are mostly higher following the stronger leads from Wall Street overnight. Stronger-than-expected US consumer spending data helped boost sentiment, while a big jump in financials is buoying Asian names.
The Shanghai Composite is the best performer, up 1% while the Kospi and Nikkei 225 are 0.6% and 0.3% firmer respectively. The Hang Seng is seeing some selling pressure, currently down 0.9%.
In Australia, the ASX 200 is currently 0.7% firmer at 4292, having traded up to an earlier high of 4308. After another session of strong gains on Wall Street it was highly probable today would be another fairly positive session for the local market.
While the advance might not have been as strong as we had been hoping for this morning it is nonetheless encouraging to see our market-driving financial, materials and industrial sectors among the day’s best performers. The only losers on the session are the defensives, with the healthcare, utilities, telecoms and consumers staples all lower between 0.1% and 3.8%.
Europe
Equity markets saw a bumper start to the week yesterday with those open in Europe finding support off the back of better than expected US economic data and the fact that hurricane Irene failed to have the impact on New York that many had previously feared.
Granted there has been disruption and the subsequent insurance bills will be high, but it could have been far worse so as a rather torrid August draws to a close, an upbeat mood does seem to be settling on the spread betting market.
Whether this can be sustained is likely to rest on the data itself - US consumer confidence and the FOMC meeting minutes are likely to be instrumental here, although Bernanke's speech in Jackson Hole last Friday will also still be ringing in the ears of many and the strands of economic optimism flagged here have without doubt been invaluable.
Eurozone consumer confidence and UK mortgage lending data will also be watched as respective barometers of sentiment.
Earnings news is relatively limited today although Bovis in London, Barnes & Noble on Wall Street and L'Oreal in Paris all look set to highlight in respective markets.
Ahead of the open we're calling the FTSE up 146 at 5276, the DAX up 32 at 5702 and the CAC up 23 at 3177.
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.
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.
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"Spread Betting Markets Rise on Ben Bernanke Speech" last update by AG, 30-Aug-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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