US Shares Spread Betting Markets Edge Higher as EU Leaders Meet
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 10 January 2011: 10.30am Update
London’s FTSE 100 pushed higher this morning, led by strength in commodity stocks after US aluminium firm Alcoa posted better-than-forecast Q4 results, and on hopes of monetary policy easing in China following trade data.
By 10.30am (London time) the FTSE 100 stock market index was up 1.06% to 5671.96, while the broader FTSE 250 was 0.89% higher at 10,341.95.
China’s trade surplus falls
China's exports and imports grew at their slowest pace in more than two years in December, as foreign and domestic demand faded.
Annual export growth of 13.4% in December was in line with expectations, but it was a big downside surprise for import growth, sinking to a 26-month low of just 11.8% year-on-year versus the 17% forecast.
The December trade data is a key link in a series of activity indicators to be published by China over the next fortnight, including fourth-quarter GDP, which will likely show that the nation suffered its worst quarter in two years.
The data suggests a tough first quarter, bolstering expectations of more policy action from Beijing to support the world's second-largest economy.
Christmas discounting boosts retailers
Data this morning showed that retailers finished 2011 with the best sales growth in months, as hefty discounting lured in cash-strapped shoppers.
The value of retail sales on a like-for-like basis was 2.2% higher on the year in December after a 1.6% fall in November, coming in much better than the 0.1% rise forecasted by economists.
This morning, Debenhams said that sales at stores open over a year, excluding VAT sales tax, were flat in the 18 weeks to 7 January, which was much better than analysts had forecasted.
Separately, Marks & Spencer said that it saw a 0.5% rise in underlying sales in the 13 weeks ending 31 December as customers treated themselves to its upmarket foods. Food sales jumped 3%, while general merchandise sales fell 1.8%.
Alcoa kick-starts US earnings
Alcoa kick-started the US earnings for the previous quarter last night by posting a fourth quarter loss due to a steep plunge in aluminium prices.
Nonetheless, the company announced that it beat its revenue expectations and gave a positive outlook for global demand for the metal.
Alcoa said revenue rose 6% to $6 billion, even as the price of aluminium fell 6% in the fourth quarter. It further posted a loss from continuing operations of $193 million, compared with a profit of $172 million in the same quarter of 2010.
The aluminium producer forecasts 7% growth in global demand this year, and added that aluminium demand should grow 12% in China, a key market for the company.
Shares of Alcoa finished 2.95% higher yesterday at $9.43 a share.
Looking ahead
US futures are pointing to a slightly higher open on Wall Street this afternoon, with the Dow currently expected to start 0.27% higher at 12,392.69 and the S&P 500 kicking off 0.23% higher at 1280.70.
On the economic data front, wholesales inventory figures are due at 3pm (London time).
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 10 January 2012: 5.30am Update
Overnight, US shares edged modestly higher as European leaders met to discuss the region’s continuing debt crisis, with attention also focussed on the onset of the US Q4 reporting season.
Among the major averages, the Dow Jones Industrial Average added 0.25% to close at 12,392, the S&P jumped 0.25% to 1280, while the NASDAQ edged 0.1% higher to end at 2676.
Among the major S&P sectors, energy, industrial and financial names were all firmer, while materials stocks finished marginally weaker.
Earnings season begins
Alcoa got the earnings season under way with a result which met expectations with after-hours trade reflecting this.
Traders will certainly like the fact they plan to be cash flow neutral or better this year, albeit cutting costs and with 7% expected global demand growth in aluminium, driven by an improvement in the aerospace and automotive space. Relief that the results weren’t terrible could be enough to see the stock do well today.
Across Asia, regional markets are all firmer after Wall Street managed to put European issues on the back burner and edge higher on the eve of earnings season.
The Kospi is the region’s best performer, higher by 1.7%, while the Shanghai Composite is seeing a gain of 1.5%. Elsewhere, the Hang Seng and the Nikkei 225 are firmer by 0.6% and 0.4% respectively.
Europe
It seems we are in for a bright and lively start to European trade with Asian markets firing out the blocks despite a subdued US session.
The Merkozy meeting may have failed to deliver anything concrete, but expectations were low anyway so EUR/USD remained firm, with the dollar index close to key resistance.
It seems European leaders, sensing the market urgency, are trying to wrap up negotiations among the 26 nations who have signed up for the fiscal compact slightly earlier than expected.
The speculation on the level of haircut rolls on, although comments from Olli Rehn that the agreed level will be in line with the October agreement were in stark contrast to German finance minister Schaeuble’s view that more is needed.
We are likely to hear more about this in the coming days, and until we get confirmation of this event being agreed on, traders will show concern on the next tranche of aid Troika will award Greece, notably a €14.5 billion bond redemption due in March.
Tier-one data is relatively thin on the ground today so it will be left to the fixed income market to drive price action in other risk assets.
Holland, France and Austria are due to tap the markets in bill and bond auctions and one suspects they should not have too many issues getting the desired amount away.
We saw both UK BRC and RICS house price data showing improvement (released in Asian trade) although the impact to sterling was modest and even less so on our FTSE opening call. Maybe it will have more impact in London trade today.
Ahead of the open we are calling the FTSE at 5648 +36, DAX at 6054 +37 and the CAC at 3150 +23.
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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"US Shares Spread Betting Markets Edge Higher as EU Leaders Meet" last update by AG, 10-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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