Posted on | August 16, 2012 | No Comments
European Spread Betting Markets
It’s been another slow and mixed holiday trading session in Europe.
Markets continue to tread water in the vacuum of no new developments in the Eurozone debt crisis, while the ability of the US to post continued mixed economic data reports just about keeps the wheels on the QE train.
Commodity stocks have led the gainers on the FTSE despite continued evidence of a slowing Chinese economy.
Data released this morning that showed Foreign Direct Investment in China dropped to a two year low. Under ordinary circumstances, this would be treated as a negative as it suggests investors are pulling back over concerns about falling economic growth.
Conversely, this has been turned into a positive, following recent comment from Chinese PM Wen Jiabao that he sees growing room for further monetary policy action.
This has seen mining stocks lead gainers with Vedanta, Anglo American and Kazakhmys pushing higher.
The best performer in London has been Lloyds, after it announced the sale of £1bn worth of private equity assets to investment group Coller Capital.
On the downside, insurance group Prudential is lagging after having its target price downgraded by Nomura, on the basis that the company is overvalued at current levels.
Eurasian Natural Resources has continued its declines from yesterday after seeing UBS downgrade its target price for the stock in the wake of its disappointing results yesterday.
After benefiting from sector takeover chatter yesterday, water utility, Pennon Group, is also amongst the losers, ahead of an interim management statement tomorrow.
US Spread Betting Markets
US markets opened mixed today as once again economic data shows a mixed picture of the US economy.
Weekly jobless claims continue to trade near the middle of their recent range at 366k, while building permits jumped sharply in July by 8.6%, well above expectations, however, housing starts fell more than expected, by 1.1%.
In the wake of yesterday’s miss on Empire Manufacturing, today’s Philadelphia Fed index also missed expectations for August coming in at -7.1, recovering from last month’s -12.9, but not by as much analysts had hoped.
Companies in focus include technology bellwether, Cisco Systems, who posted profits above expectations after the bell last night, while revenues also came in higher than expected.
Facebook shares are also once again in the spotlight as the lockup period on share sales expires and the shares once again reach new lows.
Video games maker Electronic Arts is another mover, pushing higher on the back of bid speculation.
FX Spread Betting Markets
Forex spread trading markets remain stuck in their ranges with the main gainers being the Swiss franc and the euro, both pushing higher.
Spanish bond yields continue to fall on speculation that the Spanish government is on the brink of getting the first tranche of its banking bailout. In turn, this has led to a slightly bid bias in the single currency against the US dollar.
The pound has had a good day as well after UK retail sales data showed a 0.3% gain in July and a sharp upward revision in June from 0.1% to 0.8%.
With these strong figures, we could well see a significant upward revision to Q2 GDP next week, given that last week we saw that the construction component was also overstated.
The US dollar has hit its highest levels in over a month against the yen as US 10 year yields push back to levels since early May on the back of speculation that further easing measures might be some way off.
This has seen bonds sell off, which in turn pushes yields higher, however, some still cling to the belief that the Fed will ease policy at their September meeting.
Today’s economic data has kept that option just about on the table as the US dollar slips back, however the commodity currencies don’t appear to be buying it, as they underperform the rest of the FX market.
Commodities Spread Betting Markets
Gold prices continue to find support despite a report today showing that demand has fallen sharply over the last quarter, raising speculation that we could see further falls. This seems unlikely given that the metal is trading in a range for now.
The lack of any significant price movement in itself is not that significant given that, historically, gold has a tendency to drift for quite some time before then embarking on its next move.
Over the last 12 years, gold has never had two negative quarters in a calendar year, and demand over the next two quarters looks likely to remain fairly robust.
This comes due to seasonal buying from India as well as concerns about the economic outlook in Europe and Asia, and the likelihood of further stimulus measures.
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Spread Betting, FX and CFD comments by Michael Hewson, Market Analyst, CMC Markets.
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