Spread Trading - Shares Bounce as Investors Look for Bargains

Posted on | May 20, 2010 |

European shares recovered some of yesterdays 2% losses as investors hunted for bargains in the banks after news that Dubai World has reached a deal to restructure its large debt. However, continued weakness in the miners kept gains on a leash.

The main gainers today are the banks, which are having a bit of a respite thanks to the Dubai World debt restructuring deal. Whilst energy firms are also higher on the back of weaker than expected crude stockpiles.

Continued mining weakness is giving us a clear indication that sentiment is still weak and market confidence remains low, for now. The nature and circumstances of the German ban on naked short selling is still on investor’s minds though the initial shock has certainly been digested.

Are the Gold Price Falls Positive for Shares?

The large falls in the price of Gold over the last 48 hours is however a positive sign that flights to safe havens has paused somewhat and investors could be enticed to recycle some of their gains here back into equities should Indices start to show signs of stabilisation.

All the noise around the markets has been negative for a good few weeks now, such as the Euro Zone debt situation, impending large scale austerity measures, the German short selling ban, and so it is no surprise that market confidence has taken a severe knock.

UK Retail Sales

UK Retail Sales rose more than expected for the month of April, growing by 0.3%. However, the market reaction was rather muted and investors remain cautious for the outlook of the high street with impending budget cuts and potential tax rises to come when Chancellor Osbourne announces his emergency budget on June 22nd.

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 Giles Watts, Head of Equities, 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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