Category — CFDs

Yesterday’s positive gloss has dimmed somewhat today, and investors have been greeted with a more sedate yet edgy opening session.

With central banks the key driver in dictating market direction today, the FTSE is currently off by 14 points at 6360.

Stock market futures have been dogged by speculation and conjecture in relation to whether or not the FOMC will detail an exit strategy from quantitative easing.

Today is crunch day, and it is unclear how exacting the Federal Reserve Chairman, Ben Bernanke, will be about relaying forward-looking plans to the waiting world.

What is certain is that we can expect some volatility during his statement, as the markets get to grips with any implications.

News that mining giant Rio Tinto is to cut more than 40 jobs in an effort to reduce costs, along with a positive outlook from Citigroup, has seen the company top the FTSE 100, adding more than 2%.

Overall though, the mining sector is expected to remain under pressure given the new downward growth revision from HSBC for the world’s largest commodity consumer: the bank has forecast that Chinese GDP will be 7.4% in 2013.

Conversely, Aggreko is languishing at the bottom of the index, with the share price shaving 3.37% as a result of a downgrade from JP Morgan.

Despite the fact that the power provider stated yesterday that it would meet half-year expectations, the profit warnings from the last year still weigh it down.

Closer to home, a minority of the voting members in the UK Monetary Policy Committee stated that the need for additional monetary stimulus was ‘compelling’, while remaining unanimous about keeping rates on hold.

We saw UK year-on-year inflation creep back up to 2.7%, with expectations that it will go as high at 3% this summer.

This is coupled with a negligible degree of accompanying wage growth, and one has to question whether the Bank of England has lost all regard for its key mandate.

The sterling-dollar market has pulled back on the news and is currently trading at $1.5620.

We are expecting the Dow Jones to open up 17 points at 15,335.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Financial Market Comments from Brenda Kelly, Senior Market Strategist, IG Index.

The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.

Content provided by IG Index which is Authorised and regulated by the Financial Services Authority. FSA Register number 114059.

A financial trading video discussing central bank stimulus expectations, the potential for Fed tapering and the reaction of the forex markets.

• EURUSD – Trading at 4-month highs, investors seemingly ignoring ECB’s discussion of negative interest rates
• GBPUSD – Struggled to break above 200DMA at $1.5705
• USDJPY – Strong correlation with Nikkei 225, now broken below Ichimoku cloud but that resistance is at ¥97.10

Spread Betting & CFD trading carry a high level of risk to your capital and you can lose more than your initial deposit. Only speculate with money that you can afford to lose. These trading products may not be suitable for all investors so seek independent advice.

Video content by Michael Hewson of CMC Markets

The contents on CleanFinancial.com including any articles or videos are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice or form the basis of an of investment decision.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Content provided by CMC Markets. CMC Markets UK plc and CMC Spreadbet plc are authorised and regulated by the Financial Services Authority in the UK, registered offices, 133 Houndsditch, London, EC3A 7BX.

In mid-morning trading, the FTSE 100 is enjoying modest gains, up 20 points, lifted by positive results from Whitbread and a calm atmosphere ahead of the FOMC.

It would appear that UK spread betting investors are sticking to the ‘wait and see’ policy in advance of tomorrow’s Fed decision.

The nagging worry remains that the world’s most powerful central bank will put the boot in and bring this rally to an abrupt end with a decision to ease back on stimulus.

The Fed definitely appears to be caught between a rock and a hard place. They know that a reduction of QE could do untold damage to the economy, but they are also aware that they need to avoid stoking the risk of uncontrollable price inflation.

Gains are tentative across the board this morning, with the positive mood dampened by a lacklustre ending to the US session last night.

UK inflation data showed that price growth accelerated in May, rising to 2.7% year-on-year, which will be an unpleasant coda to Sir Mervyn’s tenure at Threadneedle Street.

Nevertheless, the pound was little changed by this news, as everyone waits for tomorrow’s Fed meeting.

However, the rise in consumer prices will increase the squeeze on hard-pressed British consumers, something that will provoke chills of anguish in the retail sector.

At least Whitbread is still doing well.

The hospitality chain saw sales rise at its coffee and hotel arms which offset weakness in its restaurants.

Interestingly, the shares have nearly doubled since the beginning of 2012.

Today’s results may reignite speculation that the firm will look to spin out its Costa Coffee division which has expanded to challenge Starbucks for control of the UK coffee market.

Both the Fed and ordinary investors will look to US consumer price data this afternoon for any clues that might help divine Ben Bernanke’s next move.

Even if we do see the expected increase to 1.4% year-on-year growth, we are still comfortably away from the 2.5% target set by the Fed, so Mr Bernanke still has plenty of room for manoeuvre.

One worry has cropped up from an unexpected quarter; President Obama yesterday dropped a strong hint that Mr Bernanke will not be renewed in his post at the Fed.

This will cause concern that the dovish caucus at the Fed has met its Waterloo, with a new Chairman being less amenable to the policy of sustained easing currently pursued under Mr Bernanke.

Ahead of the open, we expect the Dow Jones to start 30 points higher at 15,210.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Financial Market Comments from Chris Beauchamp, Market Analyst, IG Index.

The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.

Content provided by IG Index which is Authorised and regulated by the Financial Services Authority. FSA Register number 114059.

Ahead of the FOMC and G8 meetings, Michael Hewson’s video technical analysis considers many of the most popular spread betting markets including:

• Japan 225 bounced off 12,200 – BoJ may not add extra stimulus with GDP at 4.1%
• USD/JPY – Needs to move back above ¥95.80 to stabilise
• Germany 30 – Looking for gains but how will flood damage effect growth?

The analysis also looks at a range of other key markets such as the UK 100, EUR/USD, GBP/USD, EUR/GBP, AUD/USD, Gold and Crude Oil.

Spread Betting & CFD trading carry a high level of risk to your capital and you can lose more than your initial deposit. Only speculate with money that you can afford to lose. These trading products may not be suitable for all investors so seek independent advice.

Video content by Michael Hewson of CMC Markets

The contents on CleanFinancial.com including any articles or videos are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice or form the basis of an of investment decision.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Content provided by CMC Markets. CMC Markets UK plc and CMC Spreadbet plc are authorised and regulated by the Financial Services Authority in the UK, registered offices, 133 Houndsditch, London, EC3A 7BX.

The FTSE 100 is up 34 points at 6352, bouncing off some technical support levels as traders take cues from a more positive Asian session.

The huge rally in equity markets since March 2009 may well reflect the lack of discipline and exit-planning from the US Federal Reserve in response to the financial crisis.

As a result, it’s little wonder that equity markets have been behaving akin to a petulant teenager since the start of QE tapering discussion last month.

The G8 summit gets underway in Fermanagh, Northern Ireland today.

With Britain chairing the discussions, we can probably expect tax compliance and greater transparency at the forefront of the agenda, and little real impact on financial markets anticipated in the near-term.

There is a light diary in terms of economic data releases today.

The Italian Trade Balance fell in April to €1.9 billion against the comparable €3.24 billion March. Year-on-year, exports increased 4.4% and imports fell 2.6%.

With the market adopting a more defensive stance in advance of Wednesday’s FOMC statement, the telecommunications sector is helping to preserve the upside whilst the more risky financial sector firmly out of favour.

Last week’s fall below the 180p has seen bargain hunters buy into the fortunes of Vodafone today, with the share piece adding more than 2% this morning.

Resolution Ltd has benefited from an increased target price from JP Morgan; the shares have seen a rise of 2.42% in early trade.

ARM Holdings has taken a leg-down, owing to a broker downgrade from Numis. The share price fell 2.81% this morning.

The 24% decline from the highs of 21 May has now pushed the stock to lows not seen since late January. This is also below a previous support level which may indicate an increased bias to the downside.

The US Fed Empire State Manufacturing Index will be released later this afternoon.

This has seen a slowdown in recent months, declining in each of the last three updates. A figure of 0.4 versus the previous -1.4 is expected today.

While the expectation is that the euro will continue its upward bias against the dollar, we can expect some choppiness in the pair around the data release.

The Dow is currently trading up 116 points at 15,186.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Financial Market Comments from Brenda Kelly, Senior Market Strategist, IG Index.

The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.

Content provided by IG Index which is Authorised and regulated by the Financial Services Authority. FSA Register number 114059.