US Spread Betting Markets Trade Lower on Weak Home Sales Data
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 27 January 2012: 6.00am Update
In US trade, markets retreated from early highs after home sales data came in weaker than expected.
The move saw US markets shed some of the gains from the previous session. However, European stocks rallied as investors reacted to news that the FOMC’s monetary policy is likely to remain accommodative for even longer than previously expected.
The Stoxx 600 index for Europe is now back in bull-market territory, having recovered more than 20% from its September lows. The euro has responded accordingly, ending the session above 1.31.
Among the major averages, the Dow Jones Industrial Average lost 0.2% to close at 12,735. The S&P shed 0.6% to finish at 1318 and the NASDAQ declined 0.5% to close at 2805.
A few key results were released in US trade, with Caterpillar, the world’s largest construction and mining equipment maker, posting earnings that exceeded analysts’ estimates.
Asia
The Australian market re-opened trading in an impressive way today, and is leading the gains in the Asian region. Financials and miners are among the best performers in the region, as markets shrug off a relatively weak lead from US trade.
A softer US home sales reading has been largely overlooked by Asian markets, which are still reacting positively to the Fed’s dovish statement and potential for further quantitative easing.
The ASX 200 and Shanghai are up around 1% each, while the Nikkei and Hang Seng are around half a percent higher.
US and Europe
Looking at the opening calls, European markets are pointing towards a weaker open, giving back some of the strong gains they posted yesterday.
US markets are looking at a relatively flat open after having lost some ground in the session following the home sales data.
American shares fell under relatively mysterious circumstances last night, with some traders referring to weak new home sales numbers; however, we just don’t buy that argument.
The S&P may be in a bull market from the October lows, but we need to see a break of the downtrend from the all-time high of 1576, which comes in at 1327 to convince the bulls to add to new positions given the sharp run-up of late.
The issue of the Greek debt swap rages on, and it seems as though an agreement is imminent, although the focus of the market has shifted on how involved the ECB will be with its holdings bought under the SMP program.
The talk in Asia has been about QE3, and while some had been positioned for it already, there are others who have changed tact and the inflows into gold companies today have been staggering.
There is even a view that you simply can’t lose by buying commodity names right now, if the US continues to recover, then commodities appreciate; if the US starts to fall apart, then commodities enjoy the benefit of increased QE expectations.
The worrying take out of the Fed meeting was that Mr Bernanke and his team don’t seem to share the same optimism the global markets seem to have; how can the Dow be testing multi-year highs when the Fed is so pessimistic and feel the need to print?
The fact that two Fed members feel the Fed’s fund rate shouldn’t be raised until 2016 paints a pretty grim picture.
European markets have a subdued feel to them today although with the level of event risk seen in late morning trade volatility could pick up.
UK and European data is light, although given the recession fears in Europe M3 money supply should get a firm look and a sub 2% print will bring out the euro bears.
Italy also auctions €11 billion in two different short-dated bill auctions, but given the demand seen in recent bond auctions, we’d be surprised if this caused too much of an upset.
The rest of the data comes to out of the US is Q4 GDP, which should print 3%, while University of Michigan confidence and core PCE could cause so movement in assets.
Ahead of the open we are calling the FTSE at 5764 -31, the DAX at 6500 -40 and the CAC at 3343 -20.
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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"US Spread Betting Markets Trade Lower on Weak Home Sales Data" last update by AG, 27-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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