Spread Bettors and Investors Look for Bargains

Posted on | May 26, 2010 |

Investors hunted for bargains today in the first positive sign for weeks helping European Indices to rally as much as 2%. The miners, banks and energy firms were all in high demand helping to drive Indices higher across the board.

One of the pressures on the markets of late has been a vacuum of stock demand and it seems with Indices having hit their lowest point since last September yesterday, bargain hunters have been enticed back into the market, particularly having seen such a sharp turnaround in US trading last night.

We have started to see some minimal recycling of funds out of the US Dollar and back into equities, but it seems that by and large the investors who are buying stocks today are the same people who have just sat on the sidelines for the last few weeks.

Uncertainty over the eurozone debt problems and its potential impact on growth is still playing on investors minds. However, the positive moves in stock markets across Europe today has certainly helped us breath a sign of relief that there remains some form of confidence out there.

Today’s moves, whilst positive, are not enough to convince that we are out of the woods yet. We need to see investors continue to build on these new positions before the market gain afford to relax some more.

The strongest demand we have seen so far has been concentrated on the miners, who are benefitting from a weaker dollar and stronger Copper prices. This has helped to lift the sector higher by as much as 5%, with Lonmin and Kazakhmys the leading gainers on the FTSE 100, rallying over 6%.

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.

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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