Financial Spread Betting Investors Boost Equities Ahead of European Council Summit
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 17 October 2011
The spread of protests around the world reminds us of just how tetchy people are about the destruction that banking crisis has caused.
The resulting recession and now sovereign debt crisis will never be forgotten and from it we have seen austerity measures imposed on many of the world’s richest nations. Even without the credit crunch of 2007 and resultant banking crisis, nations with vast debt burdens would eventually have been found out and their unsustainable debt mountains would have to have been addressed.
The speed with which things have unravelled may have been different if the banking system was still in tact but it was almost a necessary evil for developed economies to wake up and realise they can’t continue to borrow.
One of the things that did come as a surprise about the protests in the City at the weekend, which are continuing into today, was that some of the people there were there because of the coalition’s NHS proposals.
There’s no a correlation between the spending cuts and NHS reforms so this was rather an odd place to chose to vent frustration over the proposals. We all find change a bitter pill to swallow but in the case of the NHS as long as the service remains free at the point of need and standards don’t fall then making it more efficient can only be a good thing. It’s getting the people who work for the NHS on board that’s the real challenge.
A little bit of politics to start the week and now back onto the markets, which seem to be flying high once again.
Despite nothing but rhetoric coming out of the G20 meeting at the weekend (did you expect anything else?), financial spread betting investors are continuing to buy equities ahead of the key European Council summit this coming weekend which is expected to reveal the answer to all our problems.
Looking at the Capital Spreads prices, the FTSE is well above the 5500 level at the time of writing having opened higher and already this morning is adding to the gains. Now that the index has overcome the 5400 barrier the next targets in sight for the bulls are 5555 and 5600, with 5600 likely to be a more stubborn level since this was past support for the index.
There’s little in the way of economic data due out today except from the US there’s Empire manufacturing and the industrial production which might add to the bullish tone for stocks if they come in above expectations.
Since the start of the month the euro has put in a good performance against its counterparts and was just short of a month high on Friday versus the dollar.
Despite the strength in equities, this morning the forex spread betting market is looking a little more cautious than we could have expected. Some spread bettors are positioning themselves just in case European leaders struggle to meet the deadline in curbing the debt problems.
The euro is down against the dollar this morning at 1.3861 but is trading above its 1.3800 support level, which could signal some potential upside here.
With the equity markets strengthening and the greenback sliding, market participants appeared to be in the mood to snap up some deals on Friday and were drawn to gold, helping push its price higher in a session where risk takers were apparent.
Whether it was the better than expected economic data from across the Atlantic that increased optimism as to whether a recession will be avoided or the strong physical demand from Asia that made the precious metal so attractive, one factor that definitely offered support was the increasing hopes the G20 finance ministers will find a solution to the euro area debt troubles.
All in all, the yellow metal gained $15 to close at $1,680.5, which at time of writing, hasn’t had much added to it, as gold is trading at $1,682.1.
After viewing the US Department of Commerce’s report, showing that retail sales grew 1.1 per cent last month, ahead of the 0.8% estimates, there was an indication that consumers are still mucking in on assisting boost the overall economy.
Crude felt the benefit of these numbers straight away, as the demand for energy was thought to be staying strong and even the weaker than expected consumer sentiment numbers released later on were not enough to put a dampener on the market positivity.
Currently, it looks as though the bulls haven’t quite run out of steam, as Brent is trading around $112.93 with InterTrader.
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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'Financial Spread Betting Investors Boost Equities Ahead of European Council Summit' edited by SD, updated 17-Oct-11
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