UK Shares Trading: Cheming Stocks Fall Despite Announcing Profit Growth
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 24 January 2011: 10.45am Update
The week-long rally in financial markets finally stumbled this morning, as a combination of weaker US earnings and the absence of a Greek debt deal caused investors to lock in some of their recent gains.
By 10.40am (London time), the FTSE 100 was down 0.74% at 5739.72, while the FTSE 250 had lost 0.98% to 10,761.30.
A weak finish last night in the US, where volumes dropped to one of their lowest non-holiday levels for nine years, was prompted by ongoing concern about earnings from US corporations.
So far, S&P 500 companies are not registering the hoped-for growth, beating estimates at the lowest rate in ten years.
Meanwhile, in Europe, it seems as if markets are finally getting fed up with the lack of a deal on Greece.
Their annoyance has been precipitated by Eurozone finance ministers, who last night rejected the ‘maximum’ offer set by private creditors, sparking fears that we are due yet another round of tortuous negotiations on this thorny issue.
Defence firm Chemring dropped 14% today despite announcing further profit growth, as investors fretted about possible additional reductions in defence expenditure in major nations. However, it still expects to increase its dividend by 25% to 14.8p per share.
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 24 January 2012: 5.00am Update
US markets were relatively flat overnight, as investors traded cautiously ahead of a conclusion from Greece debt negotiations.
There is yet to be any confirmation of a result out of Greece, but reports continue to suggest that the Greek government is close to a deal with private creditors.
In other developments, Germany is considering running the EFSF and the ESM in parallel. However, this has been suggested in the past, and we suspect the hurdles such a move would face might make this much harder than it seems.
Among the major averages, the Dow Jones Industrial Average lost 11 points to close at 12710. The S&P rose a point to 1316, but the NASDAQ fell 0.1% to finish at 2784.
After the strong start to the year we have had so far, some analysts are beginning to feel that the indices spread betting markets are in overbought territory and are beginning to lock in profits after recent gains.
Asia & Australia
We are seeing a continued extension of market illiquidity and quietness in Asia, with many of the major regions out for the Chinese New Year.
Equity markets in the region pushed higher early in the session, but have since pulled back as fears mount that Portugal will need a second bailout. Reports are suggesting that Portugal won't be able to return to markets for financing next year.
The Nikkei 225 is up 0.3%, whilst the ASX 200 is 0.1% higher.
Markets enjoyed a positive start to the day on increasing hopes for a near-term easing of Europe's debt crisis. However, investors are growing increasingly nervous about an expected Greek debt solution.
A conclusion to the negotiations was expected over the weekend, but nothing is yet to be announced. Risk assets continue to trade cautiously on the slight chance that the result out of Greece comes in contrary to expectations
Europe
With caution seen across the Asian region, US and European markets are pointing towards modest losses at the open.
Last night’s Wall Street performance was akin to that of a deer frozen in the headlights. Having reached five-month highs, US shares seem hesitant to move any higher in the absence of a compelling catalyst.
European markets did manage modest gains overnight on, hopefully not misplaced, optimism that European finance leaders could cobble together a plan to bring structural reforms to the region. However, the naysayers and doubters remain large in number, with many suggesting the strong start we have seen for equities in 2012 is nothing more than a bear market rally.
The flat finish on Wall Street overnight is being partially attributed to building speculation that the recent spate of better-than-expected US economic data may stop the Fed from embarking on QE3 anytime in the immediate future. This would be a clear disappointment to some who still believe more stimulus is required to keep the US recovery on track.
While Thursday’s FOMC release is being keenly anticipated, today’s European Manufacturing PMI number and Industrial new orders data will be closely watched as an indicator of the region’s activity levels.
Ahead of the open we are calling the FTSE down 20 at 5763, the DAX down 33 at 6404 and the CAC down 19 at 3319.
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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"UK Shares Trading: Cheming Stocks Fall Despite Announcing Profit Growth" last update by AG, 24-Jan-2012
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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