Dow Futures Trade Higher Ahead of Cyber Monday Retail Boost
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 28 November 2011
A rare Monday where markets are starting in bullish mood as the gain for the FTSE so far this morning is around 1%.
Needless to say banks and resource stocks are amongst the gainers having been heavily sold off in the past few weeks. Investors are also feeling a little bit more bullish following last Friday’s bumper shopping spree.
In the US, Dow futures are 1.5% higher ahead of “Cyber Monday” where the spending is due to continue as consumers scour the internet for seasonal online deals.
For European spread betting indices the price action seen at the end of last week might be seen as a bullish signal and that the reversal of the recent weakness is underway.
The daily candlesticks for Wednesday and Thursday formed a doji star and then Friday and today have complimented that formation with some rallies.
This also coincides with the month of December which is almost underway and we all know what happens in December for equity markets or at least what has happened more often than not in the past. A bit of bullish fever seems to be sweeping through the markets for now, but the big question is whether it can last.
The FTSE 100 is firmly back above 5,200 and has been rallying throughout the morning taking it to 5250 at the time of writing.
This has been a very welcome move for the Financial Spreads clients who were quite long of the FTSE 100 going into the weekend.
The rally, from a fundamental point of view, is being assisted by rumours that the IMF are concocting some sort of elaborate bailout plan for Italy, as well as the eurozone stepping up a gear and exploring the idea of the ECB playing a critical role in sovereign debt intervention.
Either way the little pieces of information are enough to get investors excited that European leaders are exploring all avenues, despite Germany’s hard stance towards making the ECB the lender of last resort.
If any of these rumours regarding the ECB are substantiated then equities really could fly. If not, then it’ll be a case of we’ve heard it all before and the spread betting markets could come crashing back down again.
Friday saw forex spread bettors flee the riskier currencies as Spanish bond yields traded near their record highs.
The euro, was inevitably hit as nerves are still running high in the market over the bigger picture; the eurozone debt crisis. The weekend has been and gone and traders have returned with some fire in their bellies and ready to take on a bit of risk this morning.
The IMF stated over the weekend that they are putting together a €600bn package which is designed to cover any potential Italian default. The news is pushing the euro higher against the dollar at €1.3315. Nevertheless traders should be cautious over this bear market squeeze.
The sovereign debt concerns weighed heavily on gold’s price during Friday’s session. Investors’ feared that plunging equity markets would reduce ‘free risk capital’ and therefore long positions in the metal were liquidated.
Support was provided by a firm US opening of the Dow Jones though. By the end of the session, the yellow metal was trading around mid-range at $1,680.5.
At time of writing, thanks to speculation over a euro rescue package, the metal has been shunted through the resistance of $1,710 and is trading around $1713.5. From a technical point of view that could point towards a potential rally in today’s trade.
Crude oil saw a pullback initially on Friday as trade was thin while market participants in the US were recovering from their Thanksgiving dinners.
The driving force behind the dip was the falling stock markets, pulling oil down with them.
In addition to this, the single currency was under pressure which had a negative effect on the commodity markets. Things have turned this morning though and with the euro trading around 100 points up and Brent crude has been pulled up higher too, trading at $108.7.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'Dow Futures Trade Higher Ahead of Cyber Monday Retail Boost' edited by SD, updated 28-Nov-11
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