The regular monthly spread trading review from IG Index.
IG Index FTSE Trading - Apr 08
"FTSE 100 stages impressive recovery"
The first quarter of 2008 was the FTSE 100's worst start to a year since its inception back in 1984. So it probably came as a relief and something of a surprise to see relatively strong gains in April.
Towards the end of the month, the blue-chip index had pushed back up above the 6100 mark, managing to reach levels not seen since early January. Throughout April the theme for the market seemed to be to 'buy the dips', with any weakness ultimately proving to be short-lived and the market bouncing back sharply.
This has left many world stock markets poised below what some feel are key barriers. Levels that have, in the past, stopped any further recovery. Going into May, traders and investors alike will be watching to see if the FTSE 100 can continue to build on its April gains, surge further past 6100 and claw back more of the losses suffered since the beginning of the year
(IG Index price data: compiled 30 April 2008)
IG Index Oil Trading
"Crude oil pushes out to reach fresh all-time highs"
As recently as our February Monthly Review crude oil popped up after it broke through the $100 per barrel mark for the first time. The last two months have seen further all-time highs, with the latest one just shy of $119 per barrel for the June US light crude contract (Nymex Crude Oil).
This month OPEC warned that oil prices could rise to as much as $200 per barrel, citing the falling value of the US dollar as a catalyst. Of course, OPEC is an oil-producing cartel, so for the more cynical readers this sort of statement is akin to an estate agent saying that house prices will go up forever. Of course the crude oil price trend of the past few years is plain for all to see.
Over the past couple of months, the $100 zone has proven to be something of a floor. Many chart-based traders would probably only consider that a move below here, at the very least, might suggest that the market is running out of steam.
(IG Index price data: compiled 30 April 2008)
IG Index Forex Markets
"Dollar slips to fresh all-time low against the euro"
US dollar weakness, particularly against the euro, is another trend that has been clear for some time. The EUR/USD hit a fresh high in April, albeit briefly, with the currency pair poking above the $1.6000 level for the first time.
The continued downbeat outlook for the US economy, coupled with the expectation of lower US interest rates, has conspired to make other currencies more attractive to investors and traders.
The $1.6000 area for the EUR USD cross rate has been lost in recent days but the past two months have seen support for the currency pair in the $1.5300 area. Analysts will be closely watching to see if buyers re-emerge to set up another possible attempt on the previous high.
(IG Index price data: compiled 30 April 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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'IG Index Markets April' edited by IG Index, updated 07-May-08
Index of UK financial market trading articles - the regular closing market comments from IG Index...see Index.
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