FTSE Banks Fall as US Launches $200bn Lawsuit on Banking Sector
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Trading 5 September 2011
The announcement by the US of a $200bn lawsuit against the banking sector for the miss-selling of mortgage backed assets is hurting the banks this morning.
For more on this please also see our feature, Indices Fall as US Announces $200bn Lawsuit Against Banking Sector.
This has lead to a weak stock market so the FTSE has dipped below the 5200 level. At the moment it seems impossible to be bullish of stocks when the markets keep getting bombarded by bad news.
Last Friday the Euro had a bit of a spike against the Dollar after the US employment data was released. However, the jump was short lived and the pair has continued to fall ever since.
This has come on the back of an election loss in Germany where Angela Merkel’s home state didn’t vote for her party. Of course the main worry with this is that there could be less support for further Eurozone bailouts. As a result, the pair is now trading around $1.4127 and has traded below its last resistance level.
In line with the concerns for support in Merkel’s party, the Australian Dollar has fallen to a week low against the US Dollar. To add more woe to the Australian currency, they have their central bank meeting tomorrow and it’s expected that interest rates will stay on hold at 4.75%.
Currently trading at $1.0581, the pair could see potential downside over the next couple of days as the build up to the rate decision approaches.
Disappointing Non Farm Payrolls helped spur investors back into the gold spread betting market on Friday as they were reminded that the largest economy in the world is still in trouble.
This came after a round of weak manufacturing data, boosting the need for a currency alternative and therefore sending risk-averse traders into the yellow metal.
The fall in the equity markets though this morning hasn’t sparked a further rally, as gold is hovering around the $1885 level at time of writing.
Gold’s cheaper alternative silver also enjoyed the company of risk-averse investors as speculation was rife over the Fed having to ease its monetary policy again at some point.
All of Friday’s concerning economic data helped the precious metal gain nearly two Dollars to finish the session at $43.20 and, with a bullish short term trend, we could see the August 22nd high of $44.22 challenged.
Concerns were flowing about demand for black gold as the employment figures came in unchanged, below the expected figure of 80,000 jobs being created.
Even with the Tropical Storm Lee potentially hitting the Gulf of Mexico’s refineries, normally offering a good support for the commodity, crude oil prices weren’t held. Instead, market participants jumped onto the fears that oil wasn’t immune to the faltering US economy.
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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'FTSE Banks Fall as US Launches $200bn Lawsuit on Banking Sector' edited by SD, updated 05-Sep-11
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