Posted on | July 31, 2012 | No Comments
European Spread Betting Markets
It’s been another low volume/slow day on European markets with the London market struggling above the 5,700 level while the rest of Europe is weighed down by weaker technology and banking stocks.
Initially spread betting markets appeared untroubled by the continued woeful economic data out of Europe with most eyes firmly fixed on this week’s key central bank meetings.
This firmer tone soon gave way to weakness in the afternoon session after better than expected US economic data suggested that the Fed may hold back from easing when it concludes its two day meeting tomorrow.
German retail sales for June slid back again for the third month in a row. Unemployment data from Italy and Europe continues to point to a sharp consumer slowdown with unemployment once again hitting euro era highs in Italy at 10.8% and across Europe as a whole at 11.2%.
Disappointing earnings statements from across Europe have sent banking shares lower, with UBS, Deutsche, Commerzbank and Spanish bank BBVA all disappointing the markets.
This has sent UK sector peers Barclays and RBS lower. However, the decline in the RBS share price could also be part due to comments by CEO Stephen Hester that the bank could face a heavy fine as part of the Libor scandal.
Oil giant BP also disappointed investors this morning as the company cited weaker oil and gas prices as well as ongoing litigation costs from the Gulf of Mexico for the nosedive in profits to a mere $238m in Q2. The figure is a drop of 95% from Q1.
Technology shares have also taken a hit today as Sage Group slips lower after being on the end of two broker downgrades.
On the plus side, mining stocks were broadly firmer ahead of Chinese manufacturing PMI data due early tomorrow and there is vague talk circulating the markets about a possible reserve requirements cut, with Vedanta and Rio Tinto leading the gainers.
US Spread Betting Markets
US markets slipped lower on the open after disappointing personal spending and income data for June showed that despite a 0.5% rise in personal incomes.
Personal spending remained flat suggesting that consumers continued to retrench in the face of ongoing economic uncertainty.
This shouldn’t really be too much of a surprise given the disappointing retail sales numbers seen in the last three months.
Chicago PMI numbers continue to hold up, rising slightly in July to 53.7 from 52.9 in June.
Consumer confidence numbers for July rose to 65.9, well above expectations, suggesting that tomorrow’s Fed meeting is likely to disappoint investors looking for guidance as to future easing measures.
On the earnings front, there was some good news from pharmaceuticals giant, Pfizer, with Q2 earnings beating expectations of $0.54c a share posting $0.62c, while revenues also beat expectations.
Nasdaq OMX stock is also heavily down after UBS announced it would start legal proceedings over the botched Facebook IPO.
FX Spread Betting Markets
The pound has taken a bit of a beating today after ratings agency Moody’s downgraded the UK’s growth forecast for 2012 and 2013, while affirming a negative outlook.
Growth was downgraded to 0.4% in 2012, and 1.8% for 2013, which still remains on the optimistic side of things.
The pound slipped against both the US dollar and the euro to hit its lowest levels of the week and could well head towards last week’s highs.
Amongst the better performers we’ve seen the euro remain fairly well underpinned despite poor economic data, and Bundesbank tape bombs rejecting a banking licence for the ESM and unlimited bond buying options.
It appears that FX spread trading markets are still looking towards this week’s ECB rate meeting for some form of palliative on Thursday.
A sharp rise in building approvals has seen the Australian dollar find support on the basis that it makes an imminent rate cut much less likely, lending it support.
Commodities Spread Betting Markets
Crude oil prices have slid sharply after this afternoon’s better than expected US economic data, as it makes any Fed measures at the conclusion of tomorrow’s FOMC meeting much less likely.
Gold prices on the other hand – which would be expected to slip back on the better data – have stayed near their highest levels of the week, as it struggles to overcome key resistance at the $1,640 level.
Please remember that Spread Betting, FX and CFDs are leveraged products and carry a high level of risk to your capital. It’s possible to lose more than your initial investment. These products may not be suitable for all investors, please ensure you understand the risks involved and seek independent advice if necessary.
Spread Betting, FX and CFD comments by Michael Hewson, Market Analyst, CMC Markets.
The above should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument.
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