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Where to Spread Bet on Indices
You can spread bet on Indices with the following companies:
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Index spread betting may also be available with other companies - notes.
Indices Spread Betting - Market Review
Spread Betting on Indices - 21 May 2012
Another G8 summit passes and provides the same old hot air where leaders agree that something urgently has to be done about the Eurozone crisis.
However, the only thing that is ever actually agreed is to schedule some more meetings in the coming weeks, where further discussions can be had about the never ending story.
The main thing to come out of this weekend was the increased pressure on Germany to accept the idea of a Eurobond.
The creation of such an asset would not be the only solution needed to resolve Europe’s woes, but it would certainly go someway to calm the waters.
One problem with Eurobonds is that they would have to come with some major strings attached in order to avoid the peripheral states going on a Eurobond issuing spree.
Such a spree would be precisely the opposite of what Germany has been trying to do by instilling some sort of fiscal discipline into the region.
The other stumbling block is that Chancellor Merkel is simply not going to allow it.
If she were to make Germany the back stop behind a Eurobond, ultimately having to pay for the PIIGS profligacy, she would almost certainly lose the next German general election in 2013. If there’s one thing that political leaders really hate, it's losing votes.
The markets have opened with a little spring in their step this morning, the FTSE 100 is up by some 15 points at the time of writing.
This comes as recent Greek polls have suggested that a pro-bailout coalition might be formed in just under a month’s time.
However we’ve seen this all before, with the bulls looking like they are just about to take control of matters and push the index higher, only for any rally to quickly fizzle out.
Support is seen at 5235 and 5185, while the downtrend is capped by the upper-downward trend line at around 5300. Resistance is also seen at 5360, 5435 and 5490.
There’s nothing in the way of meaningful financial market data today, but things will get a little more interesting as the week goes on.
Inflation numbers are out tomorrow, then retail sales and the BoE minutes on Wednesday, and the second reading of Q1 GDP on Thursday.
All-in-all, it should be a fairly quiet week, with nothing being released on Friday, so we’ll continue to focus on the next summit and developments in Greece.
Spread Betting on Indices - 18 May 2012
We are seeing further turmoil in the markets this morning as the political situation across Europe continues to dominate.
Talk of a break-up of the single currency continued to put pressure on the stock market indices, with the fall being led by the Greek and Spanish banking sectors.
Moody's has also cut the credit ratings of 16 Spanish banks, along with Santander UK, a subsidiary of the Spanish banking giant.
The downgrade came because of 'adverse operating conditions, characterised by the renewed recession, the ongoing real-estate crisis and persistent high levels of unemployment'.
The sell-off, which started during the evening session in New York, continued apace once the Asian markets opened. The Nikkei 225 fell by 3%, which was the biggest one day fall since last August.
Despite managing to rally 50 points from the overnight lows, the FTSE is currently trading at 5280, some 100 points lower than this time yesterday morning.
No economic news is scheduled for today, but all eyes will be on the eagerly anticipated Facebook flotation, due to take place this afternoon.
Despite continuing questions about the firm's ability to generate profit, the shares are in high demand and being valued at around $38. This would make the 8 year old firm worth over $100bn.
This represents one of the highest valued US share IPOs in history. However, the new shareholders will not have much of a say in how the company is run; the current owners will retain 96% of the voting power.
Spread Betting on Indices - 17 May 2012
The next month will be a battle between political will and economics.
European political will is being tested to its limit, with leaders continuing to insist that they want Greece to remain in the Eurozone. However, the likes of Mervyn King and our PM keep reminding them that a break up of the single currency is almost economically certain.
Over the past few years, politicians have been unwavering in their resolve to keep the currency union together. However, more recently, the likes of Merkel and Sarkozy, before he was ousted, had been at least discussing the possibility of a break up.
What is becoming more apparent each day is that the spread betting markets will simply not allow the likes of Greece to have their cake and eat it without paying.
The politicians are almost as deluded as many people in Greece, who think that the richer members of the Union will simply continue to throw good money after bad.
The Germans and the French remain reluctant to put more of their money on the table, either by using the ECB's potential firepower or by creating a Eurobond. However, this could make them the nemesis of the single currency that they are so desperate to keep in tact.
Risk aversion continues to whittle through the index markets and we were expecting to see the FTSE 100 open flat-to-positive this morning. However, the index has seen the sellers come in and, at the time of writing, the FTSE is at 5380, down some 25 points.
Spread Betting on Indices - 16 May 2012
Italian ten year bond yields have crossed back above the 6% level and Spanish yields have pushed beyond 6.5%.
In contrast, risk adverse investors piled into German bunds, driving their cost of borrowing even lower.
This shows that fear is gripping the markets once again, as the major concerns of 2012 look to be mimicking those of 2011.
Online spread betting markets detest uncertainty and that is precisely what we are seeing right now. Greece has been unable to form a government and has had to call for a new round of elections on 17 June.
Up until that point, we can expect volatility to remain high and the downside pressure to continue.
On top of all the European woes, there's the concern that China is slowing down quicker than was previously thought. This is compounding fears that we will see an even greater negative effect on global growth.
After yesterday's declines in US stocks, we had been calling the FTSE 100 to open some 40 points lower at around 5400. However, the selling got worse during the Asian session and our quote was another 45 points lower ahead of the open.
Now that the London market has opened, the FTSE is actually trading at 5380 and investors are closely watching the near term support at 5335, 5300 and 5275. If there are any hopeful bulls out there, they will be looking to resistance at 5490, 5615 and 5645.
The near term downward trend sees the index capped by a downward trend line that also puts some resistance at 5450.
Over the longer term, now that the index has broken below both its 200 day moving average and its upward trend line, a close below 5400 could be seen as very negative. We're now in the territory of people not wanting to catch a falling knife.
Spread Betting on Indices - 15 May 2012
Greece has a very small economy. To put it in perspective, over the past few years China has seen its quarterly growth remain almost equivalent to the whole Greek economy.
The Greek economy is, approximately, the thirty fifth largest in the world, and one of the smallest in the Eurozone. So why is it causing such complete and utter chaos?
This is purely because so many countries and institutions have lent it so much money over the past decade. If Greece were to default on its debts and leave the Eurozone, it would cause a ripple in one corner of the financial spread betting markets that would build into a tsunami. This wave could cause serious damage to other economies.
Those other economies would include the likes of Spain and Italy, where already nervous investors will rush to sell their bonds. This will see yields spike even further, hurting them all the more.
However, larger Eurozone economies won’t be immune. France is slowly starting to become a worry because its banking sector has a large exposure to Greece.
It is now becoming increasingly likely that Greece will exit the Eurozone. Unfortunately, such an exit will probably lead to a Greek recession that makes the current austerity plans look like a picnic.
At least, in the long run, they’ll have their own currency again, be able to devalue it substantially, and the deeper pain may be shorter lived.
Nevertheless, any Greek exit will also have much wider ramifications, not just for the financial markets, but for the euro project as a whole.
If countries are allowed to enter and exit as they please, it will make a mockery of the single currency and the entire one-size-fits-all venture.
If a Greek government cannot be formed this week, then they will be off to the polls again next month. This is likely to see an even more convoluted result and still fail to provide a government, especially if the extreme parties remain anti-austerity.
Despite the fears over Greece and the Eurozone, the UK 100 spread betting market is on the up this morning.
It is hardly surprising to see some sort of bounce, considering that the index markets have suffered quite heavy losses in recent days.
On the technical analysis side of things, this bounce coincides neatly with the 50% Fibonacci retracement from the August 2011 lows to the March 2012 highs.
Buyers are being tempted back in by this morning's better than expected German GDP figures. These showed that the world’s fourth largest economy has avoided a technical recession.
At the time of writing, the UK 100 is bang on 5500 and, judging by the start to today’s session, it might just be time for the bulls to win a round.
Spread Betting on Indices - 14 May 2012
European markets are in selling mode once again as the political fallout in Greece is knocking confidence across the financial markets.
The delay in the formation of a government is bringing bond repayment deadlines closer and the lack of a coalition will soon lead to another round of elections. This will simply cause more uncertainty as the anti-austerity party that is causing the deadlock is gaining significantly in the polls.
We have now even seen some central bankers talking about how to deal with a possible Greek exit. This makes it much more likely that the make up of the euro at the end of the year will be very different to the euro we know today.
In fact, many spread trading account holders have been preparing for an exit for some time now. For them, what's happening now is just the beginning of the end of Greece's euro membership.
On top of this, the Germans went to the polls at the weekend and gave Chancellor Merkel a slap on the wrist in an anti-austerity vote. Worryingly for her, this is a warning shot across the bows for her re-election bid in 18 months time.
In order to appeal to her electorate, she will probably have to take a less aggressive stance when it comes to austerity. This will play right into the hands of the newly elected French President who meets Merkel later on this week.
Unfortunately, letting profligate European governments go on spending sprees will only serve to destroy all the hard work that's been done so far to try and balance the books.
The FTSE had only been called to open lower by some 50 points but it has actually broken below the 5500 level.
We are currently seeing a sea of red across the UK shares markets, with banking stocks feeling the brunt of the selling.
The weakness is attracting some buyers, who had been used to seeing the FTSE bounce after any declines. This time the bounce doesn't seem to be forthcoming.
As a result we're ticking back towards last week's lows of the year. We have also failed to bounce off the 200 day moving average which doesn't bode well for the bulls either.
With so much negative sentiment surrounding Greece, there seems to be few investors willing to buy at these levels.
Spread Betting on Indices - 11 May 2012
So the economy is on its own again as the Bank of England ends its second round of stimulus.
Having said that, the Bank is clearly leaving the door open for a third round of QE if required. This seems likely to come sooner rather than later, as the UK economy is languishing in a recession and struggling with ever rising inflation.
However, the main cause for concern at the BoE is that the easing itself is causing inflation to overshoot their target.
Inflation is still a problem for the UK economy as it has not fallen as much as the Bank had been expecting. It continues to remain stubbornly higher than in other Western economies and so the BoE faces a nasty juxtaposition.
Whilst the decision was widely expected, it gives an indication that the priority for the central bank is edging back towards inflation rather than growth. This is a slight shift as the Bank had been focussing on growth, despite the fact that their remit is to keep inflation under control.
This is an opportunity for policy makers to reflect on the stimulus of the past to see just what good it has done for the economy.
The Bank's own claims are that the first round directly helped GDP, but they'll struggle to claim that this time round. The economy hasn't been helped by either the global picture or the coalition's inept tax and spending plans, but the QE program is questionable as well.
There have been some signs of confidence returning to the UK, as seen in the business surveys over the past six months or so. However, that confidence hasn't turned into real investment and growth yet because the banking system remains locked up.
If you're going to print money then it should go directly into bringing real borrowing costs down for business and consumers who are the front line of the economy.
This morning European markets are lower on the open, showing how fickle yesterday's rise was.
Headlines are filled with the massive 'erroneous' trading losses at JP Morgan which certainly knocked Asian markets a bit. This is also affecting the UK 100 this morning, with the index currently around 20 points lower at 5520.
Once again this brings into question the corporate governance of a bank and highlights further failures within a sector that is never going to be immune to such events.
Just when US banks had been nursing themselves back to health, one of the biggest ones joins the ever growing list that have suffered massive trading errors.
Yesterday, the Wall Street index joined a global rally, recovering 23.46 points to 12,831.58 on the back of a fall in US jobless claims.
It was a sigh of relief that alleviated some of the worries surrounding the US employment sector.
In addition, Fed Chairman Ben Bernanke acknowledged the challenges for the US banking system but said the banks are 'more resilient'. That was until the news from JP Morgan came along.
Spread Betting on Indices - 10 May 2012
The Eurozone worries continue and now Spain is propping up its banking sector by injecting cash into its fourth largest bank, Bankia.
It's a reminder that the Spanish property market is in serious trouble. This follows the boom years when developers were clambering to get a piece of the action, building huge numbers of flats and villas with borrowed money.
Now that no one is around to buy these properties, and banks are no longer willing to lend to bargain hunters, the property market has completely collapsed.
The problem with Bankia is that it is one of the most heavily exposed to the Spanish property market. They have distressed property assets to the tune of some €32bn.
Such an intervention by the Spanish government had widely been expected for some time now. However, the overriding fear amongst investors is that the country is slowly going down the route that Ireland took.
In Ireland, the state made its own banking sector interventions just before the country needed its first bailout.
If Spain goes down the same route, then the focus will move to Italy, the most indebted beast within the Eurozone, and this will really spell trouble.
In the UK, we might think that British taxpayers are hard up for having to take the brunt of our banking sector's mistakes. However, this is fairly trivial when compared with the problems that some of Europe's other taxpayers have had to endure.
Amid growing concern regarding the political turmoil in Greece, and the failure to put together a coalition government, the Dow Jones extended its losses for a sixth session in a row.
The index dropped to an intraday low of 12,748, getting closer to the support at 12,710 from 10 April. However, the Dow did manage to rebound towards the close, only finishing lower by 85 points at 12,835.
This semi rally from the lows has meant that the European indices have opened slightly higher. At the time of writing, the FTSE 100 is at 5540, some 15 points in the black.
Today's highlight comes in the form of the BoE interest rate decision but the question is whether the Bank will continue with further QE.
Current investor consensus suggests that they won't. However, with the UK economy back in an official recession, there is a chance that they might pump a little more into the market.
The problem is that the Bank is unsure of exactly how much its current QE program is contributing to inflation. And with inflation remaining well above target, they can't go too mad with their money printing machine.
At the very least crude oil futures have declined from their highs over the last few days. Hopefully we might soon see this translate into lower prices at the pump.
Spread Betting on Indices - 09 May 2012
The anti-austerity rhetoric coming from France and Greece hasn’t been good for the markets in the last few days. Yesterday saw the FTSE 100’s 2012 gains wiped-out.
There’s nothing wrong with calling for more growth measures but it has to be in the context of existing fiscal capabilities.
Without some sort of prudence, government spending and debt burdens will continue to spiral and be even more difficult to address further down the line.
In the case of France, the share of government spending in terms of GDP, is amongst the biggest of the Western economies. Increasing government spending will not be looked upon favourably by financial markets.
In the end, the new French President scraped into office with his message of change. He wants to renegotiate the most recent European fiscal pact, increase the minimum wage, reduce the retirement age (which Sarkozy had fought so hard to increase) and increase taxes on the rich.
Many of these measures were designed to do what all politicians want, i.e. gain power. It will be interesting to see if Hollande’s bite is as big as his bark.
His bark could get a little quieter if the political fallout in Greece continues and ends in yet another default and ultimately a Greek exit from the Eurozone.
The losses for the French banks would be considerable. The CAC 40 dropped 2.8% yesterday, one of the worst performances amongst the European indices.
If the French government had to bailout one of their banks then this would cause serious ramifications for their fiscal situation. If so, Monsieur Hollande’s bark really would turn into a whimper.
Equities were sold off on both sides of the Atlantic yesterday. This was primarily down to the political uncertainty in Greece rather than France. Whilst the Dow Jones dipped below the 13000 level, it did manage to rally from its lows.
This morning the European spread betting indices were expected to open in the black but at the time of writing, few buyers have emerged and so we are roughly flat at 5555.
Spread Betting on Indices - 08 May 2012
Traders should avoid extrapolating what politicians are actually going to do in office from what they said during the election campaign.
Monsieur Hollande is very unlikely to implement some of the more aggressive statements in his manifesto.
Taxing those earning above €1m at a rate of 75%, would impact tax revenue and employment numbers very negatively.
People should be aware that the bulk of big earners are not in financial services. They are in the vast array of private companies that proliferate across the European landscape.
Taxing the earnings of such people would drive investment out of France and into more accommodative countries across the globe. The basic question is why would anyone invest, work or risk capital in a country where the state will take most of your earnings?
A financial transaction tax would almost immediately drive such business overseas. It's not as though the UK or Germany are a million miles away.
Whilst some people would say "so what, financial trading is 'socially useless'", the exodus would also mean moving trading capital overseas. This would certainly hurt broker/bank balance sheets.
In addition, any attempt to implement some kind of Expansionary Austerity would certainly set stock markets on edge.
Soft Austerity is just another way of saying "do nothing and hope something turns up". I am afraid that the woes of the Eurozone sovereign debt crisis are well beyond this.
One of the major problems is that government expenditure seems to be a virtually un-slayable beast.
Companies appear to be able to actually cut, or at least stop, expenditure in actuality rather than 'in real terms'. But a huge swathe of government outlay, benefits/pensions/capital expenditure, is fixed versus inflation or other factors.
To impact outlay would mean actually cutting salaries and final pensions, even for those people who have already retired. Governments would also need to slay the dragon of health budgets and decide that perhaps Europe doesn't need to be directly involved in solving all the World's problems.
That said, we all know that most politicians will make the easy choices until the choice is effectively taken away from them. Unfortunately, Hollande risks falling into this camp.
Today sees a bit of a pull back in the spread betting markets and it is difficult to argue with this. In the current environment, the simplest route is probably the wisest.
The major European indices are still up nicely on the year, so it is not cowardly for investors to pocket some return and await events.
The stock markets had a bit of an exciting opening yesterday as the Far East reacted very negatively to the European Elections. Throughout the day some bargain hunting held sway, as investors pondered whether anything would really change, and so shares ended higher than their close on Friday.
Today is seeing a reaction to this, with the DAX sitting just above the previous support of 6500/10, currently trading at 6524/25. Investors using technical analysis will be looking to see a test of this level in the near future.
On the upside, bullish investors will be hoping to see 6570/75 and 6590/6600.
The FTSE remains at the lower end of the years trading range, effectively 5550-5975, at 5635.
There is little to really go for in either direction but our clients are getting long in anticipation of a confirmation of the range. There is even some speculation about the possibility of a move back up towards 5800 and beyond. Only a close below 5550 might change this opinion.
Spread Betting on Indices - 04 May 2012
The indices spread betting markets have managed to hold up rather well this week, despite economic data coming in consistently worse than expected.
Manufacturing, services and employment figures have all disappointed. This suggests that even if growth does exist, it is not likely to surprise to the upside.
The headlines however have been dominated by politics, with local and mayoral elections in the UK and national elections in France and Greece.
Across the water it looks like the race for President is closer than before, and it is certainly closer than the drubbing that the Coalition has suffered here.
Even though the French election had been looking like an easy win for Hollande, the financial markets have remained fairly composed. There hasn’t been any hint of nervousness since the initial worry that followed the first round of voting.
The bond markets currently seem to feel that even if Hollande gets in, he won’t be able to do all that he has proposed. Particularly since France has already lost its triple A credit rating.
We will have to wait and see what Sunday and the following weeks bring if France elects its first socialist President for 17 years.
The FTSE financial spread betting market is in the red by some 20 points this morning, following weakness across the pond.
All eyes will be on today’s US Non Farm Payroll number, which has seen forecasts downgraded since Wednesday’s weak ADP figure.
Having said that, yesterday’s initial jobless claims bucked the recent trend, by coming in slightly better than expected.
The bulls will want to see a decent Non Farms number if the Dow Jones is to continue making fresh highs for the year. The big figure is due to come in at 170k.
It is a little surprising to see the markets holding up so well this week. However, with trading remaining in a very narrow range, it would be nice to see some excitement return to the markets.
Spread Betting on Indices - 03 May 2012
Londoners go to the polls today and, across many parts of the country, local elections will also be taking place.
The mayor's office is expected to remain the same colour, and I've even heard that some bookies have already paid out on Boris winning. However, swathes of red are likely to cover previously blue councils, as voters vent their frustrations following a terrible few weeks for the Tories.
Political gaffs and a weak economy are the main reasons for the sudden and sharp mistrust that voters now seem to have for the Conservatives. The only real surprise is the sheer speed with which it has happened.
Rather like a stock market crash, their popularity has completely fallen off a cliff. It wasn't all that long ago that the majority of the public seemed to agree with their economic plans.
Interestingly, however, voters are still unwilling to give their backing to any of the alternatives, so it will be interesting to see just how far the discontent runs.
The government has been consistent in using all the usual excuses at their disposal. They have spent their time blaming our stagnant recovery on the Eurozone crisis and slowing US and Chinese economies.
Whilst these factors certainly don't help, and are partially to blame, fault also lies with the Coalition. They have been less than helpful in making the sort of changes required to boost our economy. We need a more flexible labour market and proper tax reduction to spur growth.
Once again the FTSE 100 failed at its recent highs and, just when it looked like it had managed a break higher, it reversed its gains.
The last few weeks have seen the index stuck in a bit of a range between 5650 and 5800. This morning the FTSE 100 is knocking on the door of 5800, having jumped on the open after the false breakout.
The momentum since mid April has been in favour of the bulls, who still seem to have the upper hand. We can't discount a possible test of the 2012 highs in the near future, especially if US shares remain in their bullish mood.
Having said that, near term resistance remains at 5800/20 and we're unlikely to overcome this level if we see more weak US data like yesterday's ADP number. As a result, the NFP will have to be rather good for UK spread betting investors to see a break to the upside.
Spread Betting on Indices - 02 May 2012
With many European markets closed for business yesterday, French and German shares are set for a boost in today's session.
Strong manufacturing data from the US, the world's biggest economy, has given financial spread betting investors hope that the economic recovery is gathering momentum.
The figure itself showed that US manufacturing grew in April at the strongest rate in 10 months. This resulted in the Wall Street index closing at its highest level in more than 4 years.
Nevertheless, investors are likely to remain cautious after this morning's report showed that China's manufacturing sector shrank during April; the sixth consecutive month of declines.
Tuesday's session saw strong gains on the back of the better than expected US data, which pulled global banks and commodity stocks higher.
As a result, investors will be looking to see if the FTSE can keep up the bull run after the index broke through the near term resistance around 5790/5800.
So far this morning the London market is in negative territory, just above the 5800 level, after trading higher at the open. The test for the bulls will be whether they can turn the breached resistance area into support.
Today sees the release of April UK Construction PMI data and the Bank of England March Consumer Credit and Mortgage Lending data, with both coming up at 09:30 BST.
Considering the weaker than expected UK manufacturing number yesterday, it would not be a surprise if this morning's figures also look weak. Particularly since construction was one of the main factors behind the negative GDP figure last week.
Across the pond, April's private payroll ADP figure is due out at 13:15 and will give market participants an idea of how Friday's Non Farm Payrolls might look.
To top things off, March US factory orders and revised durable goods orders are scheduled for 15:00 London time.
Spread Betting on Indices - 01 May 2012
Sell in May and go away? Not yet it would seem, as yesterday's sell off was one day too early for us claim that this age-old adage is playing out.
May is historically a mixed month for the UK 100, with half of the last eighteen years seeing gains and the other half seeing losses. In both cases the average move is just over 3%.
Continental European indices are closed for their May bank holiday so volumes are likely to be thinner than normal. As a result, it is hard to see there being any significant move in either direction for the London market.
Even though European woes continue, with Spain dipping back into recession and Greece seeing weak retail sales, the stock market indices have held up pretty well.
So far the bond markets are yet to really attack Spain as they have done in the past. And they have certainly not pushed Spanish yields higher in the same way that they did for Ireland, Greece and Portugal ahead of their bailouts.
It seems a little odd that this is still the case, as the general consensus seems to be that Spain is teetering on a knife edge.
The country is attempting to implement austerity measures that will do little to bring down their ridiculously high unemployment or spur growth.
At a time when street protests are growing, the new recession will make the government's task of cutting the budget deficit even harder.
To add to European concerns, most commentators seem to think that Greece will either need to have its debt restructured again or will ultimately leave the euro altogether.
The UK 100 is just seeing a little interest from the bulls this morning as it attempts to recoup losses from yesterday and, at the time of writing, is trading at 5750.
The index is still yet to get itself above what's proving to be strong resistance around 5800. If this break were to materialise then there could be a push higher to around the 5830/50 and 5900 levels. To the downside the major support is around 5640.
Financial Spreads' clients seem to be fairly undecided as to where the UK 100 is headed in the near-term, as they are pretty much flat overall.
Whilst the same can be said for the German DAX, US indices, which continue to defy gravity, are being heavily sold by our spread betting account holders. They clearly believe that some sort of major retracement is around the corner as we are yet to see such a move.
Spread Betting on Indices - 30 April 2012
The markets seem to be defying gravity at the moment as they brushed off Friday's weaker than expected US GDP figures.
Stock market indices managed to post a half decent gain following a turbulent few days that saw many of the major macro issues return to the forefront.
Spain's woes continued with unemployment hitting the 25% mark and a downgrade by S&P acting as a reminder that all is not well in the Eurozone.
Over the weekend, protests against the government's austerity measures took place across the whole country.
For now the protests have been peaceful but it's almost certain that there'll be more to come in the future. It will be very interesting to see whether they evolve into Greek style demonstrations.
The last couple of years have served to show that austerity is not the only answer to the debt crisis. In fact, when it is imposed, it needs to be done hand-in-hand with growth stimulus.
There's no denying that profligate government spending is in dire need of cutting back even further than most of the proposed plans. However, when it is being done at the same time as curtailing bank lending then economies are going to be suffocated.
In the UK we've seen the evidence as our economy has dipped back into recession. Voters are now seriously out of love with the Tories who are footing the bill for all the recent political clangers.
It's amazing how a few headlines about granny/pasty taxes and an inquiry into telephone hacking can turn large swathes of voters against you in such a short space of time.
With more austerity still to come and further government spending cuts planned, it will be nearly impossible to win voters back. That is, of course, unless the government can actually do something meaningful to help businesses invest and grow, rather than tinkering around the edges.
It wasn't all that long ago that the majority of people were in favour of the cuts, but now that's all changed.
This morning the FTSE is hovering around recent highs, finding the resistance around the 5800 level a bit of a hurdle for now.
Trading at 5778 at the time of writing, spread betting account holders are not currently rushing for the exit. Considering the market's recent strength, an attempt at breaching the resistance can't be ruled out.
Spread betting and CFD trading carry a high level of risk and you can lose more than your initial deposit so you should ensure spread betting or CFD trading meet your investment objectives and if necessary seek independent advice.
Market Commentry from Financial Spreads.
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Financial Spreads - tax free* trading on over 2,500 spread betting markets. With a Financial Spreads Account you can trade commission free, 24 hours a day on stock market indices, forex, shares commodities and...read review » Financial Spreads.
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Introduction to Indices Spread Betting
The most popular financial spread betting markets are the Stock Market Indices. These indices represent the combined value of some of the largest companies in the world.
The FTSE 100 Index is the basis for the most popular financial spread betting market in the UK. The FTSE 100 includes the likes of energies companies BP and Shell as well as banks such as HSBC and Barclays.
By financial spread betting on the FTSE 100 to go up or down you are speculating on the aggregate movement of all of the stocks listed in the index. A comprehensive understanding of the financial markets is required owing to the variety of sectors that are often represented.
Having said that, Indices can make exciting trading given the nature of the markets. For example, throughout 2010 the large mining companies and financial institutions have heavily influenced the movement the FTSE 100.
‘Defensive’ pharmaceuticals’ shares such as those of GlaxoSmithKline and Reckitt Benckiser have been less volatile and have therefore had less impact on the FTSE 100.
Some of the most traded indices markets include:
- FTSE 100: a share index that lists the performance of the top 100 UK listed companies. They are ranked by their market capitalisation. This index is also known in financial spread betting as the UK 100
- Dow Jones: a share index that reflects the performance of the top 30 US stocks. Also known in financial spread betting as ‘Wall Street’
- US S+P 500: a share index that defines the broader US stock market, it tracks the performance of the top 500 American firms
- German DAX 30: a share index of the top 30 German companies in terms of order book volume and market capitalisation
- French CAC 40: a share index listing of the 40 largest companies on the Euronext Paris, the largest French stock exchange
- Japanese Nikkei 225: Refers to the price-weighted average of the top 225 firms in the Tokyo Stock Exchange
Financial spread betting on stock market indices allows investors to go either long or short. If, after your research, you feel that the combined value of the companies in the Index will decrease then you can spread bet on the Index to go down. Naturally, you can also spread bet on the Index to go up.
However, financial spread betting on indices is a leveraged form of trading and so whilst this increases your potential upside you can also lose more than your initial stake. This means that you need to be fully aware of the potential benefits and pitfalls before placing any spread bets.
It should also be noted that spread betting on indices is currently tax free*.
If you are looking to trade individual equities, see Spread Betting on Shares.
How to Spread Bet on Indices
As an example, let's assume you are interested in financial spread betting on the FTSE 100, you go on a spread betting site, e.g. Financial Spreads, and see that they are offering the current quote:
This is what happens...
| Market: | FTSE 100 Rolling Daily |
| The Spread Betting Quote: | 5447.0 - 5448.0 |
| This Means That: | You can speculate on the FTSE 100 Rolling Daily market going:
 Higher than 5448.0, or
 Lower than 5447.0
This is a Rolling Daily spread betting market meaning that it does not have an expiry date. If you decide not to close your position and the session ends then your position will automatically roll over into the next session.
Note: if a trade is rolled over then you will either be charged or credited for overnight financing based on whether you are speculating on the market to go down or up.
For additional details also see Rolling Spread Bets. |
| Points Traded: | Spread bets on the FTSE 100 market are priced in £x per point.
Where a point is 1 point of the index's price movement.
E.g. if the FTSE 100 moves by 30 points then you would win or lose 30 times your stake. |
| Stake Size per Unit: | You choose your stake per point, e.g. £2 per point, £5 per point, £10 per point, £20 per point etc. |
| Quick Staking Example: | If, as an example, you went with a stake of £3 per point and the FTSE 100 moves 24 points, you would win or lose £3 per point x 24 points = £72. |
Spread Betting Example | Taking a Long Position on the FTSE 100
Financial spread betting on the index to go higher
| You Decide to Buy or Sell: |
The FTSE 100 to push:
Higher than 5448.0? or
Lower than 5447.0?
|
| Let’s Assume You Decide to Buy: | Higher than 5448.0 |
| You Choose Your Stake Size, Choosing: | £2 per point |
| Now What? |
- You gain £2 for every point the FTSE 100 goes higher than 5448.0
- You make a loss of £2 for each point the FTSE 100 falls lower than 5448.0
|
| When Speculating on a Market to Go Up Your P&L = | (Closing Value - Opening Value) x stake per point |
| | |
| Scenario 1 | The FTSE 100 climbs and the spread betting market adjusts and moves to 5494.3 - 5495.3. |
| Close and Take a Profit? | You could opt to leave your spread bet open or close it and take a profit. In this instance you decide to close your trade by selling at 5494.3. |
| Your P&L = | (Closing Value - Opening Value) x stake per point |
| (5494.3 - 5448.0) x £2 per point |
| 46.3 points x £2 per point |
| Your P&L = | £92.60 profit |
| | |
| Scenario 2 | The FTSE 100 falls and the spread betting market drops to 5407.1 - 5408.1. |
| Close and Restrict the Loss? | At this point, you may choose to keep your spread bet open or close it, i.e. close your position and limit your loss. For this example, you choose to close your FTSE 100 spread bet by selling the market at 5407.1. |
| Your P&L = | (Closing Value - Opening Value) x stake per point |
| (5407.1 - 5448.0) x £2 per point |
| -40.9 points x £2 per point |
| Your P&L = | -£81.80 loss |
Worked Spread Betting Example | Taking a Bearish View of the FTSE 100
Spread betting on the index to decrease
| You Now Select Whether to Buy or Sell: |
The FTSE 100 moving:
Higher than 5448.0? or
Lower than 5447.0?
|
| You Might Decide to Go Short: | Lower than 5447.0 |
| You Select Your Stake Size, Let's Assume You Choose: | £3 per point |
| So What Happens Next? |
- You make a loss of £3 for each point the FTSE 100 pushes above 5447.0
- You gain £3 for each point the FTSE 100 falls lower than 5447.0
|
| If You Are Selling a Market Your P&L = | (Opening Value - Closing Value) x stake per point |
| | |
| Scenario 3 | The FTSE 100 slips and the financial spread betting market moves to 5404.3 - 5405.3. |
| Close for a Profit? | You may choose to let your trade run or close it in order to take your profit. In this example you choose to close your FTSE 100 position and buy at 5405.3. |
| Your P&L = | (Opening Value - Closing Value) x stake per point |
| (5447.0 - 5405.3) x £3 per point |
| 41.7 points x £3 per point |
| Your P&L = | £125.10 profit |
| | |
| Scenario 4 | The FTSE 100 climbs and the spread trading market is revised and changes to 5482.8 - 5483.8. |
| Restrict Your Loss? | You could decide to leave your position open or close it, i.e. close your spread bet and limit your loss. In this example you decide to close your position on the FTSE 100 by buying at 5483.8. |
| Your P&L = | (Opening Value - Closing Value) x stake per point |
| (5447.0 - 5483.8) x £3 per point |
| -36.8 points x £3 per point |
| Your P&L = | -£110.40 loss |
FTSE 100 Notes:
- Financial spread betting prices taken from by Financial Spreads, 2 November 2011
- Investors could also choose to speculate on the FTSE 100 in euros/point and US dollars/point
- With online spread betting you can also speculate on the movement of a large variety of other asset classes including:
Indices Spread Betting Guides
Individual stock market index spread betting guides with worked trading examples for each market:
Where to Trade Indices Tax Free*
You can speculate on Indices tax free* with the following spread betting companies:
With financial spread betting you can lose more than your original stake or investment. Spread betting carries a high level of risk to your capital. Please familiarise yourself with the risks that are involved and before trading, ensure that financial spread betting matches your investment objectives. Seek independent advice where necessary.
Spread Betting on Indices - edited by MJ, 21 May 2012.
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With spread betting you can lose more than your original stake or investment. Spread betting carries a high level of risk to your capital so please familiarise yourself with the risks that are involved and, before trading, ensure that spread betting matches your investment objectives. Seek independent advice where necessary.
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* Based on current UK tax law. Tax law may change and can differ depending on your personal circumstances.
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