DAX 30 Rebounds After Falls on the Shares Spread Betting Markets
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Spread Betting 24 April 2012
A bounce is ensuing after the substantial sell off on the shares spread betting markets yesterday as both political and economic concerns made a lethal cocktail for investors.
When you see the financial spread betting markets drop as they did, it sets off a few alarm bells and justifiably so.
The PMI numbers across the Eurozone were truly terrible. The trend they are starting to take is worrying as the region could be heading for another deep recession. Particularly if the debt markets continue to turn against the likes of Spain and Italy.
At the moment, it doesn't seem to matter how much the IMF increases its coffers or how often the ECB President attempts to pacify the markets. Online spread betting investors continue to focus on the fact that austerity is crippling both countries and without growth the current strategy looks doomed.
Buyers were out in force yesterday for both the FTSE 100 and particularly the DAX 30, which saw the most spectacular falls.
So far this morning they are being rewarded, although the bounce is hardly awe inspiring.
The London index is up around 20 points at 5885 and the bulls are hoping that support around 5635 will hold up.
A break below here could see the next support areas of 5590 and then 5530 tested, while 5770, 5830 and 5895 are seen as near term resistance.
Economic data comes in the form of the UK's PSNB which is expected to hold around £15bn, keeping the government in line with their targets.
Having said that, there might be a higher than expected number, as we saw last month, as government departments rush to spend, spend, spend before the end of the fiscal year.
Later on there will be lots of housing data from the US which should be watched just to see if they have an impact on US trade.
Instead of showing a slight pick up in services and manufacturing for Germany and Europe as a whole, yesterday's figures presented a worsening picture. This cast fresh doubts that an economic recovery might be around the corner.
Consequently, the euro fell back below $1.3200, losing 61 pips for the day to $1.3156. For now, support at $1.31 held and a retest doesn't look to be on the cards as the EUR/USD forex spread betting market is just higher at $1.3170.
Sterling continues to receive a boost on the FX spread betting markets from those who seem to think the pound is a safe haven during these times of uncertainty.
It's a vote of confidence in the currency considering that the BoE doesn't look like it's going to raise interest rates for quite some time.
In addition, whilst QE might be on the back burner for now, growth is still flat lining and if the Eurozone situation worsens, it's only going to make the UK's job tougher.
The problem with the pound getting stronger is that, whilst it makes holidays on the continent that little bit cheaper, it causes problems for our exporters.
This is a sector that has been showing signs of life in the past few years and one that has been able to remain relatively competitive because of a weaker currency.
A slowly strengthening pound is not particularly welcome as it's the equivalent of tightening monetary policy.
Growing concerns that Europe will not be able to put its house in order sent investors to the safety of the US dollar yesterday, pushing gold futures lower during the morning session.
As a result we tested the $1,620 mark but managed to rebound, finishing only $4 down at $1,637.45. This morning the precious metal is trading at $1,639.
Deepening European economic troubles raised further questions over crude oil demand going forward and slower growth in China is surely another worry for energy investors.
Surprisingly though, after slumping initially, Brent crude pared its losses, closing near flat at $118.71, despite a drop in the WTI contract.
The question is whether that apparent strength can be sustained given that Iran and the West have started to talk. This morning Brent is a little lower at $118.40.
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'DAX 30 Rebounds After Falls on the Shares Spread Betting Markets' edited by SD, updated 24-Apr-12
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