FTSE Spread Betting Market Struggles as Greece Misses Defecit Targets
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 3 October 2011
Once again we commence the month of October on the back foot as investors reminisce about previous market crashes that occurred in the same month.
Whilst historically the Autumn month has been a positive one for the FTSE, with twenty out of the last twenty seven years seeing a gain, the “fall” often seems to play too much of a part in equity markets.
October has seen some of the biggest crashes, in 1987 and 2008 to name just two. Not only does it seem susceptible to a regular pattern of fear, but it tends to be the most volatile month too, with average ranges being double digits in percentage terms.
So as the “fall” gets underway, although you would’ve thought we were in the height of summer at the weekend, the markets ramp up into fear mode.
The FTSE spread betting market is struggling this morning after Greece announced that despite their austerity program, they will fail to meet their deficit targets for both this year and next.
As a result, the troika shouldn’t give them the next tranche of the bailout and so Greece should default. However, this still seems unlikely as European politicians don’t want to kick them when they are down.
For more on the potential for a Greek default and it’s impact on the spread betting markets please also see our feature, FTSE 100 Spread Betting Market Falls as Greece Prepares to Miss Deficit Targets.
With stock market indices flagging and bonds pushing higher, risk aversion is on the up. Therefore, we are seeing US Dollar strength this morning as the EUR/USD pair falls towards its January lows.
Currently at $1.3338, and in a strong downtrend, support is at $1.3285 with resistance at $1.3410.
As politicians twiddle their thumbs over finding a fix for the apparent Greek debt crisis, investors returned to the yellow brick as a hedge against the growing market turmoil.
To add fuel to the fire, news that Eurozone inflation had reached 3% last month was not welcomed with open arms, and this spurred further demand for the precious metal.
So despite the strength in the US Dollar, which has lately been acting as a weight on gold’s price, the yellow metal gained $6.8 to end at $1623.2. At time of writing things aren’t slowing down as the rally continues to push gold up to $1649.0.
The usual suspects were to blame for the sharp fall in the crude oil spread betting market. The weakening equity markets and strengthening Dollar joined forces to push the black gold down, possibly as positions were squared off ahead of the weekend.
The slump was weighted further by the negative Eurozone inflation data and, at time of writing, things aren’t any different as the liquid commodity sits at $101.76.
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 Spread Betting Market Struggles as Greece Misses Defecit Targets' edited by SD, updated 03-Oct-11
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