It’s been a bit of a mixed bag in Europe today at the end of the worst week for stocks this year, ahead of the weekend G8 summit in the US.

It would appear most investors have chosen to focus their attention across the Atlantic and the launch of the multibillion dollar Facebook IPO.

Somewhat bizarrely, the Moody’s downgrades of Spanish banks last night saw Italian and Spanish markets spend a lot of the day in positive territory, before sliding back.

Meanwhile, the FTSE 100 has been the worst performer, hitting its worst levels since November last year.

The rebound in Spanish stocks could well have been prompted by vague talk of a short selling ban on banking stocks, ahead of the weekend.

Despite this rebound, concerns remain about the fragility of the banking system across Europe overall, as concerns grow about further downgrades if contagion ripples spread.

This has been largely reflected in UK shares with the FTSE the underperformer in Europe with the biggest losers being state owned banks Lloyds and Royal Bank of Scotland.

Mining stocks have also taken a bit of a kicking with Xstrata leading the decliners on concerns that Chinese growth could come in under expectations.

This came after data released this morning showed that house prices in China were dropping at sharply across a number of Chinese cities.

Goldman Sachs also downgraded its growth forecast for Q2 GDP from 8.5 percent to 7.9 percent.

On the plus side, gold and silver miner Fresnillo was a key outperformer as gold and silver prices rebound strongly on speculation of easier monetary policy in the face of weakening economic conditions.

US Markets

US markets opened higher this morning on the back of shares spread betting investor enthusiasm for today’s long awaited and over-hyped Facebook IPO.

At one point pre-market indications in Facebook shares showed a $70 price in Frankfurt, giving an indication of investor frenzy to own a piece of the biggest IPO since Visa’s in 2008.

With the IPO set to launch at $38 a share and due to begin pricing at 4pm London time expect a surge of sharp buying interest, and a lot of volatile swings, as investors scramble to get on the train as it leaves the station.

It would not be too much of a surprise to see exchange circuit breakers kick in during the first few minutes of trading if demand turns out to be extremely high.

In other news Yahoo announced it is in final plans to sell a large chunk of its stake in China’s Alibaba Group back to the company.

Forex Spread Betting

Lower bond yields in Italy and Spain appear to have put a floor under the single currency ahead of the weekend.

While yields have slipped back they are still set to finish the week well above their 6 percent closing level last week.

The euro hit a four month low just above the 1.2600 level against the US dollar which remains a key support level, and could well prompt further rebounds if yields fall further.

This weekend’s G8 summit has introduced an element of caution as trader’s square positions into the close.

The pound has continued to come under pressure against the euro and US dollar after MPC member Adam Posen suggested he may have been mistaken in his belief that the economy didn’t require more easing.

Against the euro the cross could be in the process of posting a weekly hammer, which could suggest a short squeeze. The weekly close will be key in this regard.

Commodities Spread Betting

In gold and silver spread betting, prices have continued their rise from yesterday as investors weigh up the risks of further stimulus measures from central banks.

Concerns about the situation in Europe and deteriorating economic data out of the US has prompted speculation that further easing could well be on the cards.

Even allowing for the fact that the yellow metal hit its lowest level this year this week it needs to close back above $1,600 an ounce to show signs that it could be stabilising.

Oil prices have continued to struggle, with the China growth downgrade weighing on sentiment, as well as comments by German finance minister Schaeuble that the European crisis could well last another 2 years.

Both WTI and Brent prices have hit their lowest levels this year, as concerns rise that there is too much supply relative to future demand.

 
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.

Neither CMC Markets nor 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.

If markets were a theme park ride then they would be Vortex at Thorpe Park, as equities swung backwards and forwards in response to various items of both positive and negative news flow.

Once again Europe’s difficulties have been unsettling spread betting investors as fears that European leaders are losing the battle to sustain a credible response to the debt crisis increase.

This morning’s Spanish three and four year Spanish bond auction may well have got away the required amount of bonds, but the yield jumped sharply.

Talk of bank runs in Europe clobbered banking shares across Europe with Bankia in Spain gyrating wildly lower.

Reports that ratings agency Moody’s is considering downgrading 21 Spanish banks has also weighed on sentiment as the Spanish IBEX hit fresh nine year lows, as economic data confirmed that the country was back in recession.

UK banks also got caught up in the backdraft with Royal Bank of Scotland and Barclays the biggest losers in UK markets.

Basic resources stocks have also been hit hard with Vedanta Resources lower after full year revenue came in below expectations.

Bright spots have been few and far between but there has been some with interdealer broker ICAP amongst the better performers after being upgraded to “neutral” from “sell” by UBS.

Defensives have also outperformed with Shire and AstraZeneca higher.

US Markets

US markets opened lower today as once again the uncertain tone in Europe kept investors on the back foot.

Stocks to watch include some more results from the retail sector as the world’s biggest retailer Wal-Mart beat expectations on Q1, coming in at $1.09c a share.

Department store Sears also beat expectations reporting a much smaller loss than had been anticipated, coming in at $0.31c, below $0.67c.

Economic data came in broadly neutral with weekly jobless claims coming in at 370k, unchanged from the previous revision.

In other data, May Philadelphia Fed missed massively to the downside coming in at -5.8 against an expected rise of 10.

Forex Spread Betting

The pound has had a rather bad day today with GBP/USD and GBP/EUR dropping sharply.

The decline against the single currency wasn’t totally unexpected given that it has gained ground 8 of the last 9 days, so some profit taking is to be expected, especially given the prospect of further QE as problems in Europe intensify.

The prospect of a sharper rebound towards 0.8100 certainly cannot be ruled out.

The single currency also hit a new 4 month low against the resurgent US dollar after last night’s FOMC minutes gave few clues as to whether future stimulus would be forthcoming.

The Japanese yen jumped sharply after the Philadelphia Fed numbers as markets mulled the prospect of further QE from the Fed.

Commodities Spread Betting

Crude oil prices have been a bit of a mixed bag with US prices rebounding after the news that the Seaway pipeline from Cushing is being reversed today.

However, any rebound looks likely to be temporary given concerns about demand as inventories hit their highest levels in 21 years.

Brent prices have continued their slide despite talk of sanctions tightening and a military against Iran. It would seem that markets appear more concerned about the more immediate problem of Europe imploding than background noise in the Middle East.

Copper prices have struggled to push higher against a backdrop of concerns about global economic growth. This morning’s Spanish GDP numbers confirmed yet another European country back in recession.

Gold prices surged sharply off 6 month lows after today’s May Philly Fed number saw markets speculate that the Fed could well look at further easing.

 
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.

Neither CMC Markets nor 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.

European markets have retained their weaker tone today but have pulled off their lows as investors continue to worry about the turmoil enveloping Europe, sending London markets to their lowest levels this year.

The formation of a caretaker Greek government and announcement of elections on June 17th has prompted a bit of a pullback, but markets remain nervous.

Though some of the decline can be put down to some stocks trading ex-dividend, with Sainsbury’s, Glencore and Polymetal all lower

The general consensus remains one of risk aversion as fears of a Greek exit from the euro keeps investors on the side-lines.

Rising bond yields on Spanish and Italian debt has also raised concerns about contagion effects, though they have slipped back from their intraday highs, as EU leaders started to make positive noises about growth measures.

Cyclical basic resources sector stocks have struggled as metal prices drop sharply dragging miners Xstrata and Vedanta Resources lower.

Xstrata and Glencore have also been hit by broker downgrades from UBS.

UBS was more complimentary about Barclays raising its recommendation to “buy” after the declines of recent days.

Lloyds followed suit after Investec reiterated its 40p price target on the bank.

Electricity supplier Scottish and Southern Energy is also doing well after posting above expectations profits, along with a rise in its dividend.

FTSE new boy and Chemicals company Croda International is near the top of the leader board after being included in a key MSCI index.

US Markets

US markets opened higher this morning after European markets pulled off their lowest levels as investors started to lock in some profit as a bit of selling fatigue started to set in.

With FOMC minutes due later there may be some expectation that the content of those minutes could well offer some stimulus clues. Markets could well be disappointed on that score.

Amongst some of the stocks in focus, US retailer Target beat Q1 expectations of $1.01c a share, coming in at $1.11c on higher revenues.

Clothing retailer Abercrombie and Fitch also reported Q1 profits above expectations, coming in at $0.03c a share, however sales performance missed analyst forecasts.

Office supplier Staples also showed fairly resilient numbers though revenues undershot expectations.

General Motors also received a boost after Berkshire Hathaway took a 10 percent stake in the company.

Positive industrial production for April rising 1.1 percent well above expectations of 0.6 percent, has kept spread betting investors guessing about the strength of the US recovery while housing starts rose 2.6 percent, but building permits slid 7 percent.

Forex Spread Betting

The US dollar initially pushed higher almost matching the highs this year at 81.78 against a basket of currencies.

This came as investors piled in to US treasuries sending yields to their lowest levels this year, as reports of capital flight from Greek and other European banks hit sentiment.

We’ve seen a pullback from this morning’s highs as the single currency bounced back after hitting its lowest levels since the January lows at 1.2625.

The pound has also taken a hit from some profit taking after the Bank of England inflation report saw the bank downgrade its growth forecasts for the UK economy from 1.2 percent to 0.8 percent.

The better than expected unemployment numbers for March were a bright spot but not enough to prompt weakness.

Commodities Spread Betting

Copper prices have continued their declines of recent days as fears about falling demand have weighed on prices.

Australian miner BHP went as far to announce a slowdown in capital spending as the difference in costs and metals prices continues to narrow.

In crude oil spread betting, prices hit their lowest levels of the year as concerns about slowing demand continue to weigh on prices, while Brent prices also fell, dropping below $110 for the first time since January.

Inventory data continues to show surpluses suggesting that demand remains on the low side and this continues to weigh on the upside.

The gold spread betting market continues to be side-lined in favour of the US dollar though it has rebounded ahead of this afternoon’s FOMC minutes.

 
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.

Neither CMC Markets nor 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.

Last week the markets were roiled by political chaos from Greece as the elections resulted in a fragmented split in votes causing a potential vacuum and giving extremist groups a window of opportunity to get a grip on power.

The extremist parties strongly oppose the austerity programme. This is the fundamental reason why investors exited risky assets early in the week in fear that any further conflict between the Greeks and the Germans is likely to lead to the embattled nation leaving the Euro.

The direct ramifications of a Greek exit may have been cushioned due to the large write downs already, although the contagion could quickly put the likes of Spain, Portugal and Italy under severe pressure and continue to test the Euro.

Amid the political turmoil, Germany delivered better than forecast results for factory orders and industrial production last Monday and Tuesday. The fluctuating nature of these monthly figures along with the overhanging sovereign chaos marred the data.

It was reported that downgrades were looming for over 100 banks by credit rating agency Moody’s last Wednesday which added to the risk-off environment.

There was a much needed bounce last Wednesday afternoon ensuing news that the Spanish government were going to be part nationalising the country’s fourth largest lender Bankia.

This was a sign that its banking sector is finally recognising the severity of the housing situation.

Weakening Chinese data early on Thursday and Friday morning reiterated the slowdown in China and highlighted that domestic demand is waning which was underscored by a decline in inflation for April.

An interesting play on the Chinese economy would be to assess its impact on the Australian Dollar.

The Aussie Dollar has recently declined in tandem with worsening industrial and consumer activity in the world’s second largest economy, as China is Australia’s largest export market.

Similarly to Europe, there is a definite trend of slowing growth across Asia which was exacerbated by GDP reports by the Philippines and Malaysia last week.

Although bulls may be inclined to focus more on the latest US trade data which was largely at odds with the slowing growth picture and manifested that exports have risen to a record level in the States.

JP Morgan caused a stir overnight on Thursday during the Asian session and into the European session on Friday as it reported a huge unexpected $2bn loss that pervaded panic to the wider market.

The shock to the spread betting markets was probably mainly attributed to the assessment of whether this is a ‘tip of the iceberg’ scenario and that systemic risk may be lurking under the surface.

In the weeks ahead, the spotlight will certainly be on Greece’s desire, or lack thereof, to stay in the Euro and on Spain’s troubled banking sector.

Many experts believe Spain’s woes are beyond the clout of the debt firewall of 1 trillion euros if they were to need a bailout so no doubt the size of the rescue fund will hit the headlines once again soon.

In shares spread betting, any stocks that have reported good results last week, such as Intercontinental Hotels and Sainsbury’s, were overshadowed by the political and macro situation in Europe holding back gains in the share prices.

Intercontinental Hotels posted a 5 percent rise in profits driven by strong growth in China and are confident the London Olympic Games will boost revenue to deliver further impressive figures later in the year.

Sainsbury’s reported a 7 percent incline in profits achieved via the supermarket’s marketing initiatives improving its price perception to customers.

Infrastructure services firm Balfour Beatty said its order book has maintained a level in excess of £15bn so far this year and Cairn Energy have completed its acquisition of Agora Oil & Gas which gives them expansive access to licences in the North Sea.

The Spread Betting Markets - The Coming Week:

Economic data scheduled for this week include a 10 year Italian Bond Auction on Monday morning, German GDP and ZEW Economic Sentiment Tuesday morning followed by US Retail Sales in the afternoon.

On Wednesday there is the UK Claimant Count and Unemployment Rate and minutes from the latest FOMC meeting in the evening.

There are French and German bank holidays Thursday and a manufacturing index from the Philadelphia area in the States and on Friday is the start of the G8 meetings.

Spread betting is a leveraged product. It carries a high level of risk to your capital and, as it is possible to lose more than your initial investment, it may not be suitable for all investors. Therefore, ensure you understand the risks involved and seek independent advice if necessary. The tax treatment of spread bets may be subject to change in the future.

Article by Spreadex

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.

If problems in Europe weren’t enough for investors to digest, the last thing markets wanted was more headline risk, however, that is exactly what they got.

The news out of the US with respect to a huge trading loss at investment bank JP Morgan, as well as disappointing economic data from China, has seen equity markets retreat even more on what has been another bad week for investors.

The biggest fallers have been in the basic resource sector after Chinese industrial production data for April came in below expectations of 12.2 percent at 9.3 percent.

Vedanta and Xstrata are among the biggest fallers as copper prices nosedived.

Financials have also fallen sharply after the announcement of a +$2bn trading loss at JP Morgan’s, caused by a trader called the London Whale.

The loss is seen as a major surprise given the bank was seen by many as one of the few banks to come out of the financial crisis with some semblance of financial credibility.

This has sent banking shares sharply lower, led by Barclays, as markets once again fret about the risks banks across the sector take in looking to generate revenue.

The main concern is if something like this can affect JP Morgan, how vulnerable is the rest of the sector?

In Spain, the government has asked banks to set aside another €30bn to offset any further deterioration in their loan books, but concern remains that this is unlikely to be anywhere near enough.

It’s not all doom and gloom, on the plus side the more defensive sectors are performing well with utilities a major gainer led higher by Severn Trent.

Shopping centre owner Hammerson continued its gains from yesterday on speculation that it is a bid target.

In the retail sector Marks and Spencer is also higher after being upgraded to “buy” by Bank of America Merrill Lynch.

US Markets

US markets opened lower this morning with banking stocks leading the decliners as the fallout from JP Morgan continued to worry investors.

In company announcements there was good news from chip maker Nvidia who announced better than expected sales of its graphic chips for the 1st quarter.

It is not just banking stocks worrying investors though with concerns about Europe and a slowdown in China weighing on sentiment.

Markets have managed to pull off their lows as concerns about rising inflation eased in April after US PPI saw a fall of 0.2 percent month on month. Meanwhile, University of Michigan sentiment came in above expectations for May at 77.8, the highest level in over four years.

Forex Spread Betting

The biggest gainer in the forex spread betting market today has been the Canadian dollar after jobs numbers for April surprised to the upside with a gain of 58.2k, well above expectations of 10k.

The US dollar hit its highest levels since early March against a basket of currencies as investors rotate capital into the relative safe haven of the world’s biggest reserve currency.

Amongst the biggest losers has been the pound which slid back after a disappointing Nationwide Consumer confidence number for April which slid back from 53 to 44, as households worried about the effects of the double dip recession.

A downward revision in construction output figures also raised concerns that UK GDP numbers could well get revised lower, not higher, and that has dented sentiment surrounding the pound after its recent gains.

Rising Spanish bond yields continue to weigh on the single currency as it hit its lowest levels against the US dollar since January.

Commodities Spread Betting

Copper prices dropped sharply today after the disappointment of this morning’s industrial production data raised concerns that China was slowing down much quicker than investors had originally thought.

A downgrade of China’s GDP growth for 2012 by UBS has also weighed on the commodity space.

Crude oil prices have also slid sharply on the back of this weakness in equity markets as well as concern about the length of the recession in Europe.

This comes after the European Commission downgraded its growth forecasts for a number of European countries raising concerns that demand could well drop sharply.

Gold prices have also come under pressure as gold spread betting investors pile into the US dollar as investors become less bullish about the allure of the yellow metal.

 
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.

Neither CMC Markets nor 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.

Equity markets have had a more stable foundation today after the decline of recent days as investors await new developments from Europe, particularly in Greece and Spain.

The lack of any new news flow has prompted some buying in some heavily oversold stocks, as former Greek finance minister Venizelos takes his turn to try and form a government.

Slightly weaker than expected economic data out of China and Europe has served to limit the upside as growth concerns continue to weigh.

A sharp drop in Chinese imports has raised concerns about a slower pace of growth in that country as spread betting investors await further economic data early tomorrow morning with the release of inflation and industrial production data.

The biggest gainers have been in the technology sector with ARM Holdings jumping sharply after recent losses on the back of some positive broker comment.

UK banks have also performed better today with Lloyds and Barclays near the top of the leader board.

On the company updates, BT Group has slid back after full year revenue slid 4 percent, however pre-tax profit rose 17 percent.

Also lower was consumer goods giant Reckitt Benckiser after one of its largest shareholders offloaded a third of its holding.

Mining stocks have also done fairly well given the disappointing China data; however the rebound needs to be put in the context with some of the declines of the past few days.

US Markets

US markets opened higher this morning after a disappointing session yesterday, higher on the back of a more positive session in Europe.

Economic data proved to somewhat uninspiring with weekly jobless claims coming in broadly as expected, slightly lower at 367k.

The US trade deficit ballooned to $51.8bn, with imports rising sharply.

In shares spread trading, Cisco Systems has slid lower after the technology giant lowered its outlook for Q4. Rebounding European financials has seen US banks bounce back.

Forex Spread Betting

The biggest gainer today has been the Australian dollar after unemployment figures in the country, showed a sharp decline from 5.2 percent to 4.9 percent and diminishing the possibility of another rate cut in the short term from the RBA.

Also in FX spread betting, the pound has also gained after the Bank of England resisted the temptation to embark on further easing measures, despite recent disappointing economic data.

It seems likely that next week’s inflation report could well give markets some clues as to when and if the Bank could embark on further easing measures.

The single currency has also had a slightly firmer tone as Spanish bond yields have eased.

Commodities Spread Betting

Copper prices bounced off long term support at $3.63, after China’s trade balance showed a much bigger surplus than expected.

Looking behind the numbers though and the picture is slightly more worrisome, with a sharp drop in imports.

Expectations are for inflation numbers due on Friday to drop back while industrial production for April is expected to improve.

Crude oil prices have had a slightly firmer tone today; however Brent prices are still struggling to get above the 200 day MA.

US prices managed to close above the 200 day average yesterday, thus keeping the risk of further downside limited.

Gold prices have bounced back near to the $1,600 level as the recent move into US dollars has shown signs of slipping back.

 
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.

Neither CMC Markets nor 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.

The FTSE 100 traded lost 12 points after the first 90 minutes of trading, whilst the DAX and CAC both swung between gains and losses of 0.3 percent.

The FTSE 100 would have been trading flat had it not have been for dividends factors knocking 15.4 points off the UK Index.

There remains a large focus of the market towards the situation in Athens, where leftist leader Alexis Tsipras holds talks with the other main parties today in an effort to form a coalition.

However, hopes of a coalition being formed at this stage are fairly weak as it would require a fairly dramatic change of positioning from Tsipras. The leader met fierce resistance from Samaras when he yesterday called for a full rejection of the bailout terms Greece signed onto.

Yesterday’s session typifies how sensitive index spread betting investors are likely to be in reaction to each and every news story that emanates out of Athens over the coming days.

Spread betting investors will use these to help gauge the situation on the ground there and whether the stars continue to align themselves in such as fashion that would force a sharp exit from the Euro for Greece.

In the meantime, whilst we have seen some tentative buys in some European stock markets, trading remains with a short term edge.

The fact that both German and UK long term bond yields continue to fall shows that investors are exerting low risk attitudes in the medium to long term. UK 10yr yields continued to trade below the 2 percent level whilst German 10yr yields hit 1.533 percent.

Sainsbury’s continues to outperform with update

Sainsbury’s shares continued to outperform the broader grocery sector in London trading, with shares gaining another 2.6 percent after the supermarket retailer reported a growth of 7.1 percent in underlying profits to £712m.

Profits came in slightly ahead of the median forecast whilst sales also grew a healthy 6.8 percent with Justin King confident that the firm can continue to grab market share from Tesco’s.

Clinton Cards says it’s likely to enter into administration later today

Shares in Clinton Cards were suspended from trading after the card maker said it was likely to enter into administration later today.

Its biggest supplier American Greetings bought up its loan facilities from Barclays and RBS yesterday before promptly calling them in, effectively forcing the retailer into administration.

Clinton Cards said it was not party to the talks between its lenders and American Greetings leading up to the deal. When it was, it had anticipated that American Greetings would install similar waivers to that of its previous lenders in a move to help support the firm.

However, the swift deal and immediate calling in of the loans will inevitably leave a rather sour taste not just in the mouths of its shareholders, but in the UK retail sector in general with some eyebrows raised in the City.

The firms shares price has fallen as much as 87 percent over the past two and a half years, epitomising the difficulties it has faced.

It’s likely administration marks yet another mainstream higher street retailer that has unfortunately succumbed to the incredibly tough economic environment.

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 Joshua Raymond, Chief Market Strategist, 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 nor 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.

Markets across the world took a backward step last week as a result of poor economic data and political unrest across Europe.

Financial spread betting markets were closed on Tuesday across continental Europe as labour activists held marches opposing austerity causing social unrest.

In general, demonstrations appeared to pass off peacefully but the sign of continual unrest will lead to sustained market concern. The ILO echoed these fears that austerity is causing a worsening job crisis with March Eurozone unemployment up to 10.9 percent from 10.8 percent.

Ex PBOC advisor Yu Yongding enhanced this dim view on affairs by commenting that the European crisis is far from over and the worse may be yet to come.

Mario Draghi, the ECB President, offered no hints of further monetary easing and confessed that the Governing Council had not discussed a rate cut at its meeting in Barcelona.

There had been some speculation that rates could be trimmed but Draghi reiterated that policy makers see current monetary policy as accommodative and suggested that more time should be allowed for the effect of the LTRO to be seen.

In America, employment figures were mixed. The non-farm employment figure was lower than expected with 115,000 new jobs created in the previous month.

However, after a quick sell off, US spread betting indices rebounded as traders digested the news that the unemployment rate had dropped to 8.1 percent and that revised figures had shown larger increases in the job market for previous months than originally realised.

In Asia, the markets were held by expanding Chinese manufacturing whilst the strength of the Yen continued to weaken Japanese exports and their markets.

On Thursday, the Governor of China’s People’s Bank said that the US and China has agreed that exchange rates should be determined by the market in order to reduce global imbalances.

The US Treasury Secretary Geitner stated that a stronger, more market-determined currency would reinforce China’s reform objectives of moving to higher value-added production, reforming the financial system and encouraging domestic demand.

The Spread Betting Markets - The Coming Week:

Monday was Bank Holiday in the UK and equity markets were closed.

Data to look out for include the Official Bank Rate and MPC Rate Statement as well as US unemployment claims on Thursday.

On Friday UK and US PPI data is released.

In shares spread betting, companies reporting include Sainsbury’s, BT, Prudential, Old Mutual and HSBC Holdings.

Spread betting is a leveraged product. It carries a high level of risk to your capital and, as it is possible to lose more than your initial investment, it may not be suitable for all investors. Therefore, ensure you understand the risks involved and seek independent advice if necessary. The tax treatment of spread bets may be subject to change in the future.

Article by Spreadex

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.

However, the US unemployment rate dropped from 8.2 percent to 8.1 percent.

The weaker than expected reading is a disappointment, being the smallest rise in non farm payrolls since October last year and strengthens spread betting investor concerns that jobs growth may have topped out earlier in the year.

Yet a relatively strong set of upward revisions to March’s payrolls helped to ease the any overly aggressive negative market reaction, with non farm payrolls revised from 120,000 to 154,000, whilst private payrolls were revised from 121,000 to 166,000 in March.

The upward revisions leave the data somewhat mixed but nevertheless disappointing.

Market reaction

The immediate market reaction was to shy away from shares and risky asset classes, seeing the FTSE 100 an immediate 30 points lower to trade back towards the 5700 level, with the UK index trading down by over 1 percent on the day.

The key elements that indices spread betting investors are attempting to channel their interpretations of the jobs report is whether it will make any significant impact on Fed policy and specifically quicken their desires to announce a third phase of quantitative easing.

Indeed, it is in this scenario that may help to keep stocks from falling too sharply in the medium term as weak US data keeps the QE carrot firmly dangled in front of optimistic investors.

This should keep them interested in stocks in the longer term, unless we see a dramatic reversal of position by the Federal Reserve, who recently maintained that QE is in their armoury if needed.

The miners were the worst hit stock sector as a result of the jobs data with investors reducing their holdings of risky asset classes.

The FTSE 350 mining sector fell 3 percent on the day in the immediate aftermath of the jobs report, with stocks such as Antofagasta, ENRC and Vedanta Resources all falling over 3.5 percent.

With the UK soon enjoying a Bank Holiday Monday, it would not be a surprise if positions were reduced into as a means of value protection ahead of the long weekend away from the markets, and this could exacerbate the payrolls reaction somewhat.

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 Joshua Raymond, Chief Market Strategist, 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 nor 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.

Manufacturing data across Europe showed sharp declines in April with Italy in particular showing a sharp drop to 43.8, while at the same time posting a sharp rise in its unemployment rate to 9.8 percent, with youth unemployment rising to 36 percent.

Germany and France were not immune also showing further contraction in their April numbers while euro area unemployment hit euro area highs at 10.9 percent.

UK Markets

In UK shares spread betting, the biggest fallers have been banking stocks with Barclays leading the way lower, taking Standard Chartered, who reported lower than expected Q1 income growth while Lloyds Banking Group gave back some of yesterday’s gains.

Man Group has continued its torrid run as it closes back in on its April lows.

There was some good news with some positive company announcements from the retail sector after clothes retailer Next posted some well received numbers largely helped by improved sales in their on-line business.

Luxury retailer Burberry is also higher on the back of positive results from sector peer LVMH.

Satellite broadcaster BSkyB also shrugged off the negative press from the Murdoch enquiry to post a much better Q3 performance than spread trading markets had expected.

US Markets

US markets opened lower this morning dragged down by sagging European markets as well as a disappointing April ADP employment report which showed an increase of 119k jobs, well below expectations of 170k.

Even though earnings data continues to come in above or on expectations concerns about Europe’s economy continue to weigh on investors.

Mastercard posted first quarter earnings of $5.36c a share, above expectations of $5.30c a share.

Comcast also beat analyst expectations of Q1 earnings of $0.42c a share, coming in at $0.45c a share.

Time Warner earnings, on the other hand, came in below expectations of $0.64c at $0.59c.

Forex Spread Betting

The single currency has dropped sharply today as concerns about a prolonged European recession grow after some horrible economic data showed that problems in Spain and Italy continued to grow as activity in the manufacturing sector contracted further.

Bond yields in both countries edged higher, helping push the euro lower.

Germany and France weren’t immune from the deterioration either showing deeper contractions than estimated prompting concerns that core Europe was now starting to feel the effects, as unemployment rose across Europe, including Germany which had been immune.

The US dollar has gained across the board, closely followed by the Japanese yen as investors pile back into the relative safety of the greenback.

The pound has remained on the side-lines somewhat, though it has made new two year highs against the single currency after construction PMI for April slipped back less than expected to 55.8 from March’s 56.2.

Commodities Spread Betting

In oil spread betting, prices on both measures have slid back today after the disappointing data on both sides of the Atlantic.

Copper prices have dropped sharply today after rising initially on the better than expected Chinese PMI data.

The deterioration in European economic data has prompted concerns that parts of Europe are sliding into depression, while the recession in the core could well be deeper than anticipated.

The move in to the US dollar has seen gold prices slide back, but what is more surprising given the poor ADP data is the fact that the bad number has prompted speculation about further QE and undermine the US dollar.

Silver is also getting sold off sharply on the back of the stronger US dollar and weaker growth outlook.

 
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.

Neither CMC Markets nor 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.