Posted on | December 16, 2011 | 1 Comment
UK markets today have seen defensives take a back seat in the UK as commodities and basic resources staged a bounce back with miners leading the way on the back of firmer metal prices.
Kazakhmys and Antofagasta were leaders of the pack up 3.78% and 3.36% respectively.
However, it must be noted that 3 month copper prices on the LME were at their worst since late September on the back of deteriorating growth in the likes of China.
Given that spread betting markets had dropped so considerably in the past week, one could argue that the ‘risk on’ attitude is merely based on weekend position squaring and backed by fairly weak trading volumes.
Man Group was bottom of the pile dropping by 3.37% to 129p as Deutsche Bank AG reduced its recommendation from ‘sell’ to ‘buy’ on the hedge fund.
US stock market indices opened higher on the back of firmer European markets under-pinned by slightly more positive sentiment and profit taking at the end of a torrid week.
US economic data was pretty uninspiring with US CPI unchanged in November from the previous month but overall inflation was up 3.4% year on year with prices excluding energy and food rising by 0.2% in November.
The perceived moderation in the inflation data acted as a boost to equity markets, although New York Fed’s Dudley quashed suggestions of any further QE to lessen the impact of Europe’s debt crisis on the US economy in his prepared remarks to the House of Representatives.
Blackberry owner Research in Motion was in focus as its share price tumbled as the Canadian company reported that its Q3 earning fell by a whopping 71% on the back of less than successful sales of its PlayBook tablets.
The euro bounced back today after the Italian government overcame a confidence vote on its austerity package; however any upside is expected to be limited.
Uncertainty over the next Greek bailout plan, as well as when the next ratings downgrade will come from, also weighs on sentiment.
The best performers on the day have been the so-called ‘risk’ currencies with the New Zealand and Australian dollar rebounding on slightly firmer commodity prices.
The US dollar unsurprisingly has been the worst performer as commodity prices rebound at the end of a significant down week; however the US dollar still looks to be closing at its best levels against a basket of currencies since early January.
The pound has had one of its better weeks despite some pretty poor economic data and some rather uncomplimentary commentary from across the channel, closing at its highest levels since February against a basket of currencies.
Maybe if European politicians and central bankers spent as much energy and passion trying to develop a plan to save the euro, as they do in attacking the UK, then maybe sentiment towards the single currency wouldn’t be as fragile as it currently is.
In commodity spread betting, gold and silver prices have rebounded from their weekly lows quite strongly today as the US dollar gives back some of its gains.
Both metals in any event have had a bad week with gold needing to get back above its 200 day MA at $1,620 to minimise the current pressure on the downside.
Crude oil prices have also rebounded after the losses of this week, closing at their lowest levels since early October.
Copper prices have also traded back from their lows of the week but upside is likely to remain constrained over fears about the situation in Europe.
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.