UK Banking Stocks Weigh on Financial Spread Betting Markets
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 28 December 2011: 12.00pm Update
UK markets finally re-opened after the Christmas break this morning, although the atmosphere remains quiet. A post-mortem on Boxing Day sales provided a reason to examine the health of the retail sector, while a successful bond auction by Italy helped markets to hold on to early gains.
By 11.30am, the FTSE 100 was up 0.56% at 5543.76, while the FTSE 250 had risen 0.63% to 10,046.89.
Quiet day back for London, retailers in focus
As London returns to work, bleary-eyed and overfilled with turkey, markets remain quiet. UK retailing shares are under the spotlight this morning, as spread betting investors attempt to digest the reports of sales in the UK over the past two days.
As we saw with the US, heavy discounting of goods has tempted the British public back onto the high street, helped for once by the weather, with mild conditions being sufficient to drag people away from their umpteenth helping of Christmas pudding.
Retailers always hope for a good Christmas, and those hopes were particularly heartfelt this year, after an annus horribilis for the sector.
Of course, the heavy discounting will mean that already wafer-thin margins have been squeezed still further, and some have suggested that more discounting is in store now that the big items have been snapped up.
Among the gainers in the retail arena this morning was HMV, up 4% to 3.38p, as was Debenhams, while Game Group rose 5% to 7.9p.
Dixons Retail proved unable to hold onto its early gains, and was barely changed by mid-morning. Tesco was up 2%, while Sainsbury’s and Morrisons followed along in the titan’s wake with only small gains.
Financial spread betting markets were weaker in London this morning, hurt by a lacklustre day for banks in Europe yesterday. The usual trio of Barclays, RBS and Lloyds fell back, while their healthier cousins HSBC and Standard Chartered pushed higher.
Mining stocks were also mixed, with new Russian entrant Evraz down 3.7% to 377.6p.
Italian bond auction provides some excitement
With no economic data of real importance out, European markets remain eerily quiet. However, Italy provided a positive surprise for markets with a successful bond auction, lifting sentiment in the morning session.
Rome sold €9 billion in six-month bonds, with the yield halving to 3.2% from the last auction in late November.
This is likely to be a reflection of continued hope in new technocrat prime minister Mario Monti, who replaced the rather more colourful Silvio Berlusconi in November.
Markets are still worried about the high debt and low growth seen in Italy and indeed across the rest of southern Europe, but Mr Monti has set about his task with a will, and this has given hope that the new governments in Italy, Spain and Greece will stay the course of austerity and financial rigour.
US pre-market
Only weekly mortgage data is published in the US this afternoon, so markets have little to go on aside from the Italian bond auction. The Dow is currently expected to start around 22 points higher, with the S&P 500 kicking off 2.6 points up.
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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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"UK Banking Stocks Weigh on Financial Spread Betting Markets" last update by AG, 28-Dec-2011
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