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SpreadBets.org.uk - Weekly Comment Supplied and Sponsored by paddypowertrader.
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Weekly Online Spread Bet Comment, update 25 Feb 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
Equities had a remarkably resilient week, absorbing plenty of bad news and reacting well to the odd bits of good news. The US Federal Reserve revised its forecasts to expect lower growth, but higher inflation; days later the European Commission made a similar move. Inflation in China rose to an annual rate of 7.1%, the quickest rate in 11 years.
Gold and Crude Oil prices reached record highs, as did the cost of insuring against loan defaults. Despite all this, a late rally in the US left the Dow and S&P up 0.3% and 0.2% respectively. The Dax and Nikkei finished down a fraction. The FTSE 100 benefited from a higher weighting in mining stocks and a rally in bank shares to end the week +1.7%.
Equities Spread Bets
Mixed results from the banking sector saw earnings from AIB, Barclays and Lloyds TSB well received, but Alliance & Leicester shares trashed on the worse than expected numbers and poor outlook. Credit Suisse stunned the market, adding a further $2.85 billion to the previous week's write-downs and suspending several of its dealers. Cadbury Schweppes' earnings fell 65%, ruling out the possibility of a special dividend, and numbers from Centrica managed to upset shareholders and customers alike. In contrast there were good results from Hewlett-Packard, Wal-Mart, BAE Systems and Nestle. On the M&A front AIB bought a 49.99% stake in a Bulgarian bank and Vale continued to tease in its merger talks with Xstrata.
Forex Spread Bets
Fading hopes of an early cut in European rates contrasted with the stronger likelihood of another cut in US rates in March. The prospect of a widening in the interest rate differential caused a sharp reversal in the EUR / USD rate, causing it to rise to $1.4820. The Euro also broke above resistance to reach £0.7530 against Sterling. The GBP / USD rate rebounded from $1.9400 to $1.9670.
Gold Spread Bets - Crude Oil Spread Bets
Commodities fired back into life with Crude oil repeatedly breaching the $100 mark and gold hitting a new high of $953.60. Brent Crude Oil finished the week up $2.5 at $97 and gold rose $35 to end at $943.65. These moves were partly a reaction to higher US inflation, but also due to an increased flow of speculative money into the sectors.
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Spread Bets - Economic Indicators and Company Results
Week Commencing 25 Feb 08
Get that dealing pad ready for what should be a cracking week. There's bags of economic data with GDP numbers from Germany, the US and UK, along with smatterings of housing and confidence indicators. At the company level there are snapshots of the banking sector from ABN Amro, HBOS and Royal Bank of Scotland and the housing sector from Barratt Developments and Persimmon in the UK and Toll Brothers in the US. Numbers from US heavyweights Dell, Gap, Home Depot, Macys and Sears have the potential to swing the markets around, as have earnings from BAT, Bayer and Deutsche Telecom. If you're trading forex be aware that Trichet's making speeches on Monday and Thursday and Ben Bernanke is making his semi-annual speech to Congress on Wednesday.
Monday
Economic Indicators
UK: 09.30 BBA Mortgage Approvals
US: 15.00 Existing Home Sales
Results
UK: Ben Bailey, Bunzl, Hammerson finals, Minerva interims, Associated British Foods and Dawson Holdings trading updates
EU: Audi
Tuesday
Economic Indicators
UK: 11.00 CBI Distributive Trade Survey
EU: 07.00 German Q4 GDP, 09.00 German IFO Business Climate
US: 13.30 Producer Prices, 15.00 Consumer Confidence and House Price Index
Results
UK: Bodycote, Inchcape, Moneysupermarket, Persimmon, Rentokil Initial and Standard Chartered finals, Hays interims
IRE: Kerry finals, United Drug AGM
US: Applied Signal, El Paso, Home Depot, Macys, Office Depot and Target
Wednesday
Economic Indicators
UK: 09.30 Q4 GDP
EU: 07.00 German GFK Consumer Confidence, 09.00 EU M3 Money Supply
US: 13.30 Durable Goods, 15.00 New Home Sales, 15.30 Oil Inventories
Results
UK: HBOS, Logica CMG, Old Mutual, Royal Sun Alliance, Serco and William Hill finals, Barratt Developments and Kier Group interims, Dana Petroleum trading update
IRE: Irish Life & Permanent finals, Trintech quarterlies
EU: Puma and Henkel
US: Toll Brothers
Thursday
Economic Indicators
EU: 08.55 German Unemployment, EU Manufacturing PMI, 10.00 EU Consumer, Economic and Industrial Confidence numbers
US: 13.30 Q4 GDP and Weekly Jobless, 15.00 Help Wanted
Results
UK: Avis Europe, Aviva, BAT, Cattles, GKN, Ladbrokes, National Express, Royal Bank of Scotland and Trinity Mirror finals, Redrow interims, Jessops and Whitbread trading updates
IRE: Andor Tech AGM
EU: ABN Amro, Bayer and Deutsche Telecom
US: AIG, Dell, Gap, Global Crossing, Revlon, Sears, Sprint Nextel, Vale and Virgin Media
Friday
Economic Indicators
UK: 07.00 Nationwide, 09.30 Money Supply, 10.30 GFK Consumer Confidence
EU: 07.00 German CPI, 10.00 EU CPI, Consumer Confidence and Unemployment
US: 13.30 Personal Income & Spending, 14.45 Chicago PMI, 15.00 University of Michigan Consumer Confidence
Results
UK: Capita Group, Rank, Reuters, Rightmove, United Business Media and WPP finals, Blacks Leisure trading update
IRE: C&C trading update
US: Fannie Mae
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The Financial Press, what the papers said:
Last update: 25 Feb 08
Fresh from announcing strong results last week, Lloyds TSB is thought to be weighing up making an approach for another bank. According to the Sunday Telegraph, Lloyds is looking at losers Alliance & Leicester and Bradford & Bingley. Sources say that it’s early days though, the board hasn’t even reached the stage of discussing making an approach to either bank yet.
Softly, softly, the Vale bid for Xstrata looks to be getting nearer, but is still a tricky one to trade. The Sunday Times quotes banking sources saying that a £46 a share offer could happen as soon as this week, but it also suggests that the deal isn’t a certainty.
Just when the takeover of Scottish and Newcastle looked to be done and dusted, Anheuser Busch, the makers of Budweiser, are thought to be casting an eye over the numbers. The Sunday Times reckons Anheuser is contemplating an approach, but might be told to get on and make its mind up by the Takeover Panel.
Read the Sunday Business Post for a positive piece on AIB. With many banks buckling under loan losses and sub-prime write-downs, AIB is upbeat on its funding, increased dividend and even an acquisition.
The Telegraph reckons the Qataris are looking at sticking some of their $15 billion cash pool in Royal Bank of Scotland shares. This news comes just ahead of the bank’s results this week, but isn’t linked to any requests for additional funding.
No rugby articles in the Scotland on Sunday, just bad news for Northern Rock shareholders. The paper reckons the Treasury are going to tell shareholders that the bank is effectively bust and that they can use their share certificates as wallpaper.
The Independent casts doubt on whether the Blackstone bid for Close Brothers will proceed. This is down to uncertainty over the intentions of its partner in crime, Collins Stewart, whose own staff are rumoured to be mulling a management buyout.
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"Spread Trading UK" written by paddy powe, last updated 25-Feb-2008
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