Spread Trading UK Markets
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SpreadBets.org.uk - Weekly Comment Supplied and Sponsored by paddypowertrader.
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Weekly Online Spread Bet Comment, update 3 Mar 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
How fortunes change over a few hours in the stock markets. By Tuesday the FTSE Index was 250 points higher than the previous Friday’s close; there was even talk of the worst being behind us.
Optimism grew as the credit rating agencies re-affirmed two of the monoline insurers at the highest AAA rating. Then IBM announced a $15 billion share buyback.
But Fed chief Ben Bernanke put anti-freeze in the punch bowl when he presented a downbeat presentation on the US economy to Congress. His concerns were confirmed by more weak numbers, heightening expectations of a 0.5% cut in rates at the March meeting. Credit problems continued to surface with the liquidation of a $2 billion hedge fund in the UK and rumours of others in the US.
The net result was that all of the main markets were within 1% of the previous week’s close, except the S&P, which closed down 1.7%.
Equities Spread Bets
Despite positive earnings and comments from builders Barratt Development and Persimmon, financial companies dominated the news. The positive impact from the Standard Chartered results was more than offset by a further horror show from AIG, the world’s biggest insurer. AIG’s $11.5 billion write-downs on mortgage-related debt led to a $5.3 billion quarterly loss. Initially, results from HBOS were well received, but further consideration of its exposure to US mortgages saw the shares marked down 6% on the week. In Ireland good results from Kerry allowed an 11% dividend increase, but C&C confirmed February’s gloomy outlook for their end of February year-end. In the US Home Depot and Office Depot added to the pessimism with sharply lower profits.
Forex Spread Bets
The growing conviction that European interest rates would, at best, remain unchanged whilst US rates would continue to fall boosted the Euro. Traders piled in, pushing the Euro to record highs of $1.5238 and £0.7678 against the Dollar and Sterling respectively. Sterling also gained ground against the Dollar, rising to $1.9860.
Gold Spread Bets - Crude Oil Spread Bets
The weaker Dollar and further inflation worries lent further support to commodities. Gold hit a new record high of $975.90 before ending the week up $27 at $970.78. More supply disruptions in Nigeria and Ecuador helped Crude Oil to an all time high of $103.05. Brent Crude Oil improved $3 on the week to $100.1.
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Spread Bets - Economic Indicators and Company Results
Week Commencing 3 Mar 08
It’s another week for the home delivery pizzas and the incontinence pants; leave your desks at your peril. The warm-up acts over the first three days are a host of business surveys and European company results. On Thursday the temperature rises with interest rate decisions in Europe and the UK. Then Friday sees the key employment data from the US. For the petrol heads, OPEC is meeting, but there’s little hope of an increase in production being announced. Watch out for results from HSBC, Pearson, Reuters, Taylor Wimpey and Paddy Power.
Monday
Economic Indicators
UK: 07.00 HBOS House Prices, 09.30 Manufacturing PMI
IRE: 08.30 Manufacturing PMI
EU: 09.00 Manufacturing PMI, 10.00 French CPI
US: 15.00 ISM Manufacturing and Construction Spending
Results
UK: HSBC, Hiscox, Pearson, Taylor Nelson and Xstrata finals
IRE: Paddy Power and Kingspan finals
EU: IKB
Tuesday
Economic Indicators
UK: 09.30 Construction PMI
EU: 10.00 Q4 GDP and Producer Prices
Results
UK: Admiral Group, Drax, Michael Page, Premier Foods, Provident Financial, Schroders, Travis Perkins and John Wood finals, Sportingbet trading update
US: Staples
Wednesday
Economic Indicators
UK: 09.30 Services PMI, 10.30 BRC Shop Price Index
IRE: 08.30 Services PMI
EU: 09.00 Services PMI, 10.00 Retail Sales
US: 13.15 ADP Employment, 13.30 Q4 Productivity and Unit Labour Costs, 15.00 ISM Non-Manufacturing and Factory Orders, 15.30 Oil Inventories
Results
UK: Balfour Beatty, Carillion, Dragon Oil, IMI, ITV, Liberty, Partygaming and Unite finals, Close Brothers interims
IRE: Glanbia finals
EU: Adidas
US: H&R Block
Thursday
Economic Indicators
UK: 12.00 Bank of England interest rate announcement
EU: 11.00 German Factory Orders, 12.45 European Central Bank interest rate announcement, followed by press conference at 13.30
US: 13.30 weekly Jobless, 15.00 Pending Home Sales
Results
UK: Arriva, Cobham, International Power, Kazakhmys, Rathbones, Reuters, Taylor Wimpey and Segro finals
EU: Deutsche Post and EON
US: Blackstone Group
Friday
Economic Indicators
EU: 11.00 German Industrial Production
US: 13.30 Non-Farm Payrolls
Results
UK: JD Wetherspoon interims
EU: Volkswagon
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The Financial Press, what the papers said:
Last update: 3 Mar 08
HSBC's results were keenly anticipated in the press. The Sunday Telegraph forecasts the bank will reveal a record £8.1 billion of bad debts, but will aim to re-assure investors with a 10% hike in the dividend. The Sunday Times presents a different angle, disclosing that shareholder activist, Knight Vinke, has presented 4 options to the bank for dealing with the troubled US subsidiary HFC. These include walking away from HFC, leaving bondholders in the lurch.
There's unsettling news for shareholders of Premier Foods in the Sunday Times. The paper expects Premier to use this week’s results to slash its dividend in order to shore up the balance sheet.
The Sunday Business Post reports on a (not so) confidential research report compiled for the government. The report suggests that the credit crunch will leave Irish banks with a lot less money available for mortgages and business loans. This is largely due to the difficulties of raising the necessary funds in the international financial markets. The report acknowledges that these problems are global, but their focus is on the Irish situation.
Unrest at Close Brothers isn’t confined to shareholders. The Independent reports that staff are apparently up in arms over the failure to proceed with the offer from Andy Stewart. This resulted in a 12% fall in the share price.
Scary short story of the week goes to the Sunday Times. Reporting on the hedge fund, Peloton. The paper suggests that banks will now force other hedge funds to either put up more cash or liquidate positions. And we all know what happens to markets when liquidations are forced through!
The Sunday Telegraph reports on more annoyed shareholders. This time leading shareholders in Rentokil are demanding an immediate management shake-up, including the resignation of the chief executive. This follows last week’s profit warning that knocked nearly 25% off the company’s market value.
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"Spread Trading UK Markets" written by paddy powe, last updated 03-Mar-2008
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