Posted on | May 23, 2012 | No Comments
European spread betting markets have plunged today as investors realise that EU leaders appear no closer to coming to any concrete plan to deal with any fallout of a possible Greek exit as well as dealing with the more immediate problems of the European banking system.
Reported comments by former Greek PM Lucas Papademos last night that the Greek nation was considering preparations for an exit of the euro, had already set the tone this morning.
None of the news flow out of Europe today since then has changed this perception.
As the day has progressed, speculation has abounded that EU policymakers are making contingency plans for an imminent Greece exit and this has sent investors running for the exits.
The biggest fallers have typically been in the basic resources space with mining stocks heavily lower, followed by banks.
In shares spread betting, Vedanta, Xstrata and Antofagasta are the heaviest fallers while Barclays was the biggest faller in the UK banking sector.
Even fashion retailer Burberry was getting a pasting despite posting a 26 percent rise in adjusted profits, broadly in line with expectations.
On the plus side there was less than a handful of risers with National Grid and satellite British Sky Broadcasting showing some small gains.
US markets opened significantly lower today taking their cues from events in Europe though disappointing Q1 earnings from PC maker Dell didn’t really help the mood after the bell last night.
The numbers missed on all the major metrics with the biggest decline in its consumer business.
Sector peer Hewlett Packard is also expected to report its latest Q2 numbers with expectations of $0.91c a share.
Facebook shares after three successive days of declines have started the day in positive territory.
On the economic front, new home sales data for April showed a better than expected rise of 3.3 percent after a 7.3 percent decline in March.
Forex Spread Betting
The Japanese yen has been the biggest gainer today after the Bank of Japan once again fluffed its lines and chose to do nothing at its latest policy meeting.
With the yen being as strong as it is, markets had expected some form of further easing in an attempt to take the pressure off Japanese exporters from a rising yen.
The US dollar has also jumped sharply gaining the most against the commodity currencies with the Australian and New Zealand dollar the biggest fallers.
The single currency hit its lowest levels this year and lowest levels since August 2010 today as pressure continues to build for a move towards 1.1900, and the 2010 lows.
The pound slid sharply against the US dollar after an ugly April retail sales number showed a drop of 2.3 percent, one of the biggest drops in 20 years, and well below expectations of a 0.8 percent fall.
The wet weather was cited as one of the reasons for the poor number. Against the single currency the pound has held up fairly well, while 10 year bond yields on German, Dutch and Austrian bonds have hit record lows.
Commodities Spread Betting
The gold spread betting market has been unable to benefit from the risk aversion afflicting markets at the moment, also coming under pressure from a resurgent US dollar as markets roll their cash into the relative safety of the world’s number one reserve currency.
Crude oil prices not unexpectedly have taken their cues from equity markets and slid sharply lower with Brent crude prices now starting to accelerate lower as the risk premium associated with it starts to dissipate.
Iran’s agreement to allow access to UN nuclear inspectors has taken some of the sting out of the price, while global growth risks suggesting a demand slow down act as another cap.
Copper prices have pushed close to its lowest levels this year as fears that turmoil in Europe could well hit the pace of any recovery in Chinese growth, given that Europe remains one of China’s biggest export markets.
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Spread Betting, FX and CFD comments by Michael Hewson, Market Analyst, CMC Markets.
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