European Spread Betting Indices Climb 2%

Posted on | July 22, 2010 |

Investors hunted risky asset classes today after both EU and US economic data served to calm fears of an impending double dip recession. The main heavyweight sectors of the miners and banks have attracted a large chunk of the higher share demand and it is these two sectors that have been the main drivers behind today’s move higher.

British Retails Sales rose 0.7% in June, higher than the 0.5% rise expected whilst the previous months rise was revised higher to 0.8%. This has helped to paint a better than expected picture of the state of the UK high street, a time when massive public spending cuts are expected to pressurize consumer spending.

Euro zone industrial orders also surged beyond all expectations with a rise of 3.8% when the market had predicted orders to remain unchanged. The surge in new orders is the fastest rise in the last 10 years and will undoubtedly help to calm market jitters of the effects of the sovereign debt crisis in Europe.

In yet another boost to the data front, US existing home sales fell less sharply than expected in June whilst leading indicators also fell to 0.2%, also better than the market had expected, whilst the previous months indicator was revised higher.

In addition to the better than expected economic data today, company earnings have also added to the good mood, with Caterpillar, UPS and 3M all reporting strong earnings.

Conflicting picture eases

Much of the uncertainty in the market of late has been caused by a conflict between outperforming company earnings and underperforming macro economic data. For the first time in a number of weeks today’s economic data has outperformed expectations and aligned itself with strong company earnings. This has helped to ease the conflicting picture and invigorate appetite for risk.

Whilst inevitably today’s economic data paints quite a contrasting picture to the last few weeks, a double dip recession is still not out of the realms of possibility, and investors are likely to want to see economic data continue to outperform before their fears of a double dip go away.

Technical levels

However, we need to see the key Indices trade above their current resistance levels before the market can be confident that investors may build on today’s gains. Traders are watching the 5331 level on the FTSE 100 whilst the 1100 level on the S+P is also a key level that traders will want to see broken.

Please remember that Spread Betting and CFD Trading are leveraged products that carry a high level of risk to your capital and can result in losses that could quickly exceed your initial outlay. These products may not be suitable for everyone, so please make sure you fully understand the risks involved.

Spread Betting and CFD comments by Nick Serff, Market Analyst, City Index.

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.

Neither City Index not Spread-Betting.org warrant or represent that the material is accurate, complete, not misleading, or fit for the purpose which it is intended and it should not be relied upon as such.

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