UK Spread Betting
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SpreadBets.org.uk - Weekly Comment Supplied and Sponsored by paddypowertrader.
Weekly Online Spread Bet Comment, update 18 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
Last week was a tale of two central banks; chairman of the Federal Reserve, Ben Bernanke, highlighted risks to the US economy (really Ben?) and signalled further cuts in interest rates. By contrast, the Bank of England's Inflation Report suggested that rising inflation would mean fewer cuts in rates than the market was expecting.
Equities Spread Bets
Equity markets showed good gains after Warren Buffet offered to take over $800 billion of municipal bonds. However it didn't take long for investors to realise that such a move would leave the monolines with all the crap. Moodys withdrew their AAA rating of bond insurer FGIC. Despite all the excitement, equities were little changed on the week. The FTSE remained flat, but the Dax, Dow and S&P all rose by around 1%. Asian markets fared better with the Hang Seng +2.9% and Japan up 4.7%.
Once again results were dominated by the financial sector. UBS announced a further record loss and Bradford & Bingley's results were worse than expected. Credit Suisse played an excellent poker hand, combining a 72% fall in profits with the confidence to increase its dividend. American Insurance Group said that due to material weaknesses in their loan valuations, losses would rise from $1 billion to $5 billion. Bank of Ireland warned that volatile stock markets and the strength of the Euro would affect its performance for the year ended March 2008. It wasn't all doom and gloom though, with good results from British Energy, Diageo, RTZ, Elan, Coca Cola and Reckit Benckiser.
Forex Spread Bets
The Dollar fell against most currencies on strong hints of further rate cuts next month. Looking at the FX spreads: EUR - USD rate rose to $1.4670 and GBP - USD rose but then fell to $1.9580. Sterling was boosted by suggestions that interest rates wouldn't fall as far as the market expected. The Yen weakened on switching into higher-yielding currencies as risk appetite improved.
Gold Spread Bets
Gold suffered another unconvincing week finishing $11 lower at $908.45.
Crude Oil Spread Bets
Colder weather in the US, and the ongoing dispute between Exxon and Venezuela saw Brent Crude Oil rise $3 to $94.63.
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Spread Bets - Economic Indicators and Company Results
Week Commencing 18 Feb 08
There might be a cautious start to the week from those who recall the last time the US was closed on a Monday (the Dax fell by 7% and the FTSE by 4.5%). We expect plenty of focus on the banking sector after Sunday's news that Northern Rock will be nationalised. Also the bank reporting season begins in earnest with results from Barclays, Alliance & Leicester, AIB and Lloyds TSB. Make sure your news services are working on Wednesday; sandwiched between minutes from the previous meetings of the Bank of England and the US Federal Reserve are US inflation and housing numbers. On Thursday UK retail sales will provide a useful update on the state of consumer spending.
Monday
US Markets Closed- Presidents Day
Economic Indicators
UK: 00.01 Rightmove House Prices
Results
UK: Low & Bonar final
EU: Merck
Tuesday
Economic Indicators
US: 18.00 NAHB Housing Index
Results
UK: Barclays, Cadbury Schweppes, Domino's Pizza, Intercontinental Hotels, Morgan Crucible and Scottish & Newcastle finals, Thorntons interims
US: Hewlett-Packard
Wednesday
Economic Indicators
UK: 09.30 Bank of England minutes, Money Supply and Government Borrowing, 11.00 CBI Industrial Trends
EU: 07.00 German Producer Prices,
US: 13.30 CPI and Housing Starts, 19.00 Federal Reserve minutes
Results
UK: Alliance & Leicester, Anglo American, Pendragon and Rexam finals
IRE: AIB final
EU: Deutsche Boerse
US: Hertz Global
Thursday
Economic Indicators
UK: 09.30 Retail Sales
IRE: 11.00 Wholesale Price Index and External Trade
US: 13.30 Weekly Jobless, 15.00 Philadelphia Fed Index and Lead Indicators, 15.30 Oil Inventories
Results
UK: BAE Systems, Centrica, Colt Telecom, Reed Elsevier, Shire and Tomkins finals, Kingfisher trading update
IRE: Icon Q4 earnings
EU: Allianz, BASF and Continental
US: Barrick Gold, JC Penney, Morningstar, Newmont Mining
Friday
Economic Indicators
EU: 07.45 French Consumer Spending, 09.00 EU Advance Manufacturing and Services PMI, 10.00 EU Industrial Orders
Results
UK: Lloyds TSB
EU: RWE
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The Financial Press, what the papers said:
Last update: 18 Feb 08
There was plenty in the press on the Northern Rock situation. But all a total waste of time and paper as the Treasury later announced the nationalisation of the bank. This hurried report in the Observer is enough to give you a rough idea of the latest developments, but expect plenty more over the next few days.
The UK banks reporting season is starting to rock and roll with plenty of weekend speculation. The Independent puts Barclays in the spotlight, questioning the extent of sub-prime losses the bank will reveal on Tuesday. This fear follows larger than expected write-downs from Bradford & Bingley who chose to value some of their exposures differently. It’s thought that by using a similar approach, Barclays would increase its write-downs. There’s a far more upbeat report in the Sunday Times. The paper reckons that Barclays and Lloyds TSB will support good results with unexpected dividend increases. On current numbers Barclays yields 7.2% and Lloyds yields a staggering 8.4%.
The Observer leads with a scare story on Barratt Developments. It speculates that the house builder is close to breaching banking covenants with debt approaching £2 billion. But after the initial fright the paper reassures shareholders that the banks are unlikely to penalise Barratt and that the company is confident of reaching its targets anyway.
The Sunday Business Post highlights the housing problem in Ireland. Its analysis of figures from the Irish Banking Federation suggests that over a third of new homes added to the market last year remain unsold.
The Telegraph reports that BSkyB is set to appeal against the Competition Commission’s verdict that it should cut its holding in ITV.
"UK Spread Betting" written by RThomas, last updated 18-Feb-2008
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