Crude Oil Futures Weaken on Demand Concerns as Spain Struggles
Spread Betting 19 April 2012
Spain remains the focus for spread betting investors and today's important Spanish bond auction will be closely watched.
Earlier this week the country got away some much shorter-dated debt which was well subscribed. However, today's test is of much longer dated bonds, including some ten year debt. This will be a good indication of investors' confidence in the country.
Since the ECB hasn't been particularly active in the bond markets since its LTRO program, it will be interesting to see how things go without the deep pockets of the central bank wading in.
What bulls are really praying for is a successful auction which could alleviate some of the pressure on Spain.
There was lots of interesting data from the UK yesterday with a rare glimmer of light for the labour market which actually saw unemployment fall.
The problem is that a lot of the jobs are part-time, with the number of people in part-time work rising to the highest level since records began back in the 1990s.
The number of full-time jobs actually fell which continues show how fragile the labour market is. Whilst many firms are starting to hire again, it is not in the normal fashion that you would expect during a recovery.
This sort of sentiment was reflected by the world's largest money manager Blackrock. The US firm reported decent numbers but nothing that set off any fireworks.
The highlights of their results were that they were seeing more investors willing to take on a bit more risk by moving into shares. However, they were not seeing as much as they would have expected compared with previous recoveries.
So this just shows that investors and firms are not going all guns blazing at this stage of the economic cycle and caution remains the order of the day.
This is being reflected in the FTSE this morning which is creeping higher again but has had a few sessions of indecision.
At the time of writing the index is at 5780 and has just been creating a little bit of an uptrend following the few weeks of declines.
The little bounce so far is almost looking like something that could turn into a more sustained recovery for the shares spread betting markets. However, the headwinds remain strong and a return to the year's highs still seems a long way off.
A handful of US economic data will provide a better picture for investor optimism, with weekly jobless claims, existing home sales and the Philly Fed manufacturing survey due out later today.
Sterling had a strong day on the forex spread betting markets yesterday after the Bank of England minutes showed only one MPC member still supported quantitative easing.
In particular, arch dove Adam Posen gave up his call for further monetary easing after being previously in favour of more stimulus.
Forecasts that inflation would be above target for far longer into the medium term shifted the tone of the minutes away from propping up growth to taming inflation. This brought forward the expectations of a rate hike and boosted the pound.
Cable dragged itself back above the $1.6000 mark, trading at $1.6050 this morning, while the GBP/EUR spread betting market is just above €1.2200 at €1.2215.
The gold spread betting market trudged lower on Wednesday, hitting a low of $1637.8 an ounce, on reports that Syria is selling its gold reserves at discount prices.
This comes as financial sanctions imposed by the Arab League and Western nations begin to take effect.
A break of the Tuesday low at $1634 could see a sudden test of the near term support at $1611.8.
Crude oil futures continued their slide amid concern that Spain's troubles will reignite the whole European debt crisis and curb demand for oil.
Brent has fallen from the March high of $128.57 per barrel. Traders have turned bearish because of the prospects of further talks between six world powers and Iran.
Furthermore, a pipeline reversal in the United States eased demand and so Brent crude is trading at $118.60 this morning.
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'Crude Oil Futures Weaken on Demand Concerns as Spain Struggles' edited by SD, updated 19-Apr-12
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