Fixed Odds Trading w/c 20 April
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Financial Trading Week - 20 Apr 2009
Another week goes by, and world markets put more distance between current levels and the lows of March. The broad S&P 500 managed to register its sixth positive week on the trot, something that would have seemed impossible just a month ago.
Leading the charge has been the resurgent financial sector with major US banks beating analysts’ estimates with their latest earnings announcements. Wells Fargo, Goldman’s, JP Morgan and Citi Group all surprised to the upside, though many have questioned the sustainability of these results, with government bailouts and accounting changes playing a significant role in some of the outperformance.
For example some questioned the ‘orphaned’ month in Goldman’s earnings as they switched their accounting period from December to January.
British banks also performed well, but it was Barclays that stole the show. Lloyds TSB hit its highest level since February, and Barclays pushing above the £2.00 level for the first time since November last year. Barclays has been the strongest performer across the remaining UK banks over the last three months, as speculation mounts that it may be able to sell its entire BGI division including iShares at a more attractive price.
There has been mixed news from the US too, with weekly jobless claims coming in below analysts’ estimates. Continuing claims actually reached 6.02 million, an all time high, but so far markets seem more focused on the headline number. US jobs data is still woeful; it just seems that the contraction is slowing slightly.
US housing starts were at near record lows, while foreclosure activity peaked at its highest level since records began in 2005.
Despite all this, it has been a relatively good week for the US Dollar, clawing back losses made in the early part of the week against the pound. The euro continues to weaken, falling hard against the dollar and sterling last week.
The price of Gold fell as economic optimism improved slightly, but at the same time, oil dipped below $50 a barrel, as China announced that economic activity grew substantially less than the same period last year.
Next week is relatively quiet with UK CPI the stand out data point on Tuesday. Wednesday sees the release of the minutes from the last MPC meeting, along with the latest claimant count changed data. At midday all eyes will be on the Alistair Darling’s budget announcement. Higher taxes and lower public spending are expected to announced, to help offset record government borrowing. Thursday is a busy day with a raft of middle tier European announcements and US existing home sales. Friday brings a number of upper tier announcements; including UK GDP and retails sales, as well as US durable goods orders, and new home sales.
The rally over the last few weeks has lasted longer than many thought it would. The debate now rages as to whether this is the start of a meaningful recovery or simply a ‘bear market rally’. In either case, it is perhaps unlikely markets will be able to maintain this momentum for the rest of the year without some sort of pull back in the meantime. This could be the start of the recovery, but it may take longer than many people hope.
Fixed-Odds Trade on Barclays Shares
One way to play this is through a No Touch bet with BetOnMarkets. A No Touch trade predicting that the Dow Jones (Wall Street) will not touch 10,000 at any time during the next 6 months could return 28%.
The above comments do not constitute investment advice.
The author(s), Clean Financial and any company mentioned do not accept any responsibility for any use that may be made of them.
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'Fixed Odds Trading w/c 20 April' by David Evans, updated 20-Apr-09
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