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IG Index Markets - Spread Betting
The regular monthly spread trading review from IG Index.

IG Index FTSE Trading - Feb 08

"Directionless month for FTSE 100 after falls in January"

After the FTSE 100's massive plunge in January when the index traded in a 1200-point range, it was perhaps unsurprising to see a more subdued February as traders caught their breath and tried to figure out where the market was heading.

The focus in February was on the banking sector, with a raft of results providing plenty of short-term volatility. An ongoing concern was how much further damage was going to be revealed thanks to the credit crunch. A little bit of optimism regarding the banks in the second half of the month contributed to the broader market rally.

For much of the month, the 6000 level proved to be a ceiling for the index with successive rallies into this zone bringing the sellers back out. Over the last week, the FTSE staged more of a decisive push through here but we go into March with many still wondering if there is a more sustainable rally to come. Or is this just a bounce before the market turns lower once more?

Opinion is still somewhat split on this and it will probably take some time before the picture is clearer. Recent economic data out of the US, eg
  • February consumer sentiment at five-year lows,
  • US home sales at nine-year lows, and
  • producer prices experiencing their biggest rise in 26 years
paints a gloomy outlook. It remains to be seen whether this is already being priced in by stock markets and if some sort of climb, back to the highs of 2007, is possible.

FTSE spread betting

(IG Index price data: compiled 28 February 2008)

IG Index Crude Oil Spread Betting

"Record highs for Crude Oil"

After some short-term weakness in January, the end of February saw the price of crude oil once again push out to all-time highs, trading above $100 per barrel. As ever, there were a number of factors that contributed to the latest surge. Like gold, oil has benefited from a weaker US dollar - and the latest slide here helped 'black gold' move higher.

Next week sees a meeting of the oil producers' cartel OPEC and there were worries that it will decide to cut back on production. Whether that will happen remains to be seen but the simple economics of potential supply and demand helped play their part to push the price up.

Some investors also see commodities such as oil as a hedge against inflation and this is a real concern for many economies at the moment, which goes some way to explaining the continued bull market. This, plus continued global demand and the increased consumption by economies such as China, has helped fuel a multi-year rise in crude oil. Some analysts have viewed $100 as a key technical barrier for the price so it should prove an interesting market to watch in the weeks ahead.

Crude Oil spread betting

(IG Index price data: compiled 28 February 2008)

Forex Trading with IG Index

"Euro sets all-time high against US dollar"

The story in currency markets over the past few years has been one of continued US dollar weakness. For example, in mid 2001 the pound in your pocket was worth less than $1.50 - by last summer it was worth more than two dollars.

The year had seen mainly sideways trading in FX markets but this changed in the last week of February as the Euro/US dollar exchange rate (EUR/USD) moved out to all-time highs, finally breaking the $1.5000 level.

To put this in perspective, a look back to December 2002 shows that one euro was worth, roughly, one US dollar. Recent moves mean the euro has strengthened by more than 50% since then. The main catalyst for the latest strength is the market belief that the US central bank, the Federal Reserve, is going to continue its strategy of cutting interest rates to try and stop, or at least minimise, the effects of a recession.

Over the past couple of months, the $1.4300 / $1.4500 area has provided support for EUR/USD weakness. If the current strength starts to run out of steam and turns lower, this could well be a zone that longer-term currency traders view as pivotal for the longer-term uptrend seen in this market over recent years.



FX EURO USD Spread betting

(IG Index price data: compiled 28 February 2008)




The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.


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Risk Warning: Financial Spread Trading and CFDs carry a high level of risk to your capital. You may lose more than your initial investment. They 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.

Article provided / approved by IG Index which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 114059.

'IG Index Markets' edited by IG Index, updated 04-Mar-08




Related Articles:

EUR/USD, FTSE and FX Futures Trading - Monthly Review May 2011, updated 08-Jun-11
Fears about sovereign debt in Europe made May a volatile month for the EUR/USD forex pair. After coming into the month at its best levels for over a year, the pair swiftly reversed and...read article: EUR/USD, FTSE and FX Futures Trading - Monthly Review May 2011.


Dow Jones, Silver and Forex Futures Trading - Monthly Review April 2011, updated 12-May-11
After a difficult couple of months, as events in Libya and the tragic earthquake in Japan unnerved investors, April was the month when the Dow Jones once again extended its two-year plus...read article: Dow Jones, Silver and Forex Futures Trading - Monthly Review April 2011.


Euro, FTSE 100 and Nikkei Futures Trading - Monthly Review March 2011, updated 07-Apr-11
Trading in March was overshadowed by one thing: the tragic events in Japan and the ongoing concerns regarding the nuclear reactors. Unsurprisingly, spread betting market volatility went through the roof...read article: Euro, FTSE 100 and Nikkei Futures Trading - Monthly Review March 2011.


Commodities, Crude Oil and Gold Futures Trading - Monthly Review February 2011, updated 08-Mar-11
With Middle Eastern supply of oil suddenly in question, US Crude Oil erupted above the $100 per barrel mark for the first time in nearly two and a half years. And as conflict continued...read article: Commodities, Crude Oil and Gold Futures Trading - Monthly Review February 2011.


Forex, Sterling and Dow Jones Futures Trading - Monthly Review January 2011, updated 07-Feb-11
Although January started quietly enough, two pieces of surprise news for the UK economy meant plenty of volatility in forex spread betting markets and...read article: Forex, Sterling and Dow Jones Futures Trading - Monthly Review January 2011.


FTSE 100, Indices and Gold Futures Trading - Monthly Review December 2010, updated 14-Jan-11
Christmas came early for stock markets in December when the bailout of the Irish economy agreed at the beginning of the month helped the FTSE 100 to recover...read article: FTSE 100, Indices and Gold Futures Trading - Monthly Review December 2010.


Euro, Dollar and Crude Oil Futures Trading - Monthly Review November 2010, updated 09-Dec-10
November started off positively for the Euro, with the recovery that started in June appearing as if it was set to continue through to the end of the year. When the Federal Reserve...read article: Euro, Dollar and Crude Oil Futures Trading - Monthly Review November 2010.


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Risk Warning: Please note that spread betting and CFD trading carry a high level of risk to your capital. You can lose more than your initial deposit. These products 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.

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