FTSE 100 Spread Betting and European Sovereign Debt
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FTSE 100 Spread Betting and European Sovereign Debt

FTSE 100 Spread Betting and European Sovereign Debt

The world stock markets and the euro have slumped on concerns that the European sovereign debt crisis will spread across the continent. Further clouding the financial markets is the fact China has warned against military acts near its coastline, this as a new set of American/South Korean naval exercises take place.

Not surprisingly, many traders are worried about the most deeply indebted European nations and this concern is intensifying. The attention is now drifting from Ireland to Spain and Portugal. The crisis seems to be lingering as questions over whether the indebted countries can meet bond payments remain unanswered.

There have even been newspaper reports that a majority of Eurozone members and the European Central Bank have been urging Portugal to apply for a financial bailout.

What does this mean for the European stock markets like the UK’s FTSE 100? A recent Capital Spreads report said, “The FTSE 100 spread betting charts are showing a slow but steady drift lower as the sovereign debt issue plays out in the glare of the media, however it should be noted that the current global economic indicators still appear rather positive.

“Admittedly, Portugal, Ireland, Spain and Greece will probably suffer. No doubt the UK will also suffer when the budget cuts start to impact. Nevertheless this does not detract from the fact that the FTSE 100 constituent companies are trading in a global market. In fact, with a relatively weak pound, overseas earnings look ever more valuable.

“At some point a solution will be found to solve the problems of the European peripheral countries and that solution will be more money. It may also hit bond holders as they are asked/told that the value of their bonds have just been reduced.”

Looking in more detail, it will be interesting to see who takes the bigger hit as all the buyers of Irish and Spanish bank debt may soon be told that their bonds are now worth a good deal less. If that happens then the senior-debtors will expect sub-debtors to be wiped out before they are asked to take any losses.

Looking at the technical analysis of the FTSE 100, a recent Finspreads report showed that “The momentum index is still lower and the opportunity still remains for the bears to test a lower level at 5491.

“On the other hand, if the FTSE can hold above the 5705 mark and the momentum indicator rises, then the current decline shouldn’t cause any concern, in the short term at least, for the bulls.”

Indices Spread Betting Comparison


FTSE 100 (UK 100) Daily - Spread Size 1 1 1 1 1 1 1 1
FTSE 100 (UK 100) Daily - Min Stake £1 £0.50 £2 £1 £1 £1 £1 £1
FTSE 100 (UK 100) Future - Spread Size 4 4-8 6 4 3 4 4 4
FTSE 100 (UK 100) Future - Min Stake £1 £0.50 £2 £1 £1 £1 £1 £1
Dow Jones (Wall St) Daily - Spread Size 1 1 2 1 2-4 1 1 2
Dow Jones (Wall St) - Min Stake £1 £0.50 £1 £1 £1 £1 £1 £1
DAX 30 Daily - Spread Size 1 1 1 1 1 1 1 1
DAX 30 Daily - Min Stake £1 £0.50 £2 £1 £1 £1 £1 £1
S&P 500 Daily - Spread Size 3 4 5 3 5 3 3 8
S&P 500 Daily - Min Stake £1 £0.50 £1 £1 £1 £1 £1 £1^
NASDAQ 100 Future - Spread Size 3 4-10 4 3 4 3 3 4
NASDAQ 100 Future - Min Stake £1 £0.50 £4 £1 £1 £1 £1 £1
Comparison Notes.


Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

'FTSE 100 Spread Betting and European Sovereign Debt' by DB, updated 01-Dec-10

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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.


* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.

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