The regular monthly spread trading review from IG Index.
IG Index FTSE 100 Spread Betting - August 08
"First Positive Month for FTSE 100 Since April"
The stock-market recovery that started in mid-July continued in August but only really found some momentum towards the end of the month. It was something of a traditional August for the stock market: volumes were low due to the holiday season and trading was a bit choppy overall. This was a far cry from last August when the credit crunch first hit the headlines and sent stocks plunging.
As with all of the FTSE 100's recoveries over the past year, the question is how sustainable will this latest rally will prove to be? In August the UK index reached levels not seen for a couple of months and left some traders and investors eyeing the 5700-6000 zone as the next possible hurdle.
(IG Index price data: compiled 4 September 08)
IG Index Forex Spread Betting
"Sterling gets Pounded"
Coming into August the GBP/USD exchange rate was trading just below two dollars to the pound – an area it had spent most of this year skipping above and below. All this changed as August started, with the currency pair slipping to fresh lows for the year.
This prompted a fairly relentless slide that saw GBP/USD almost 10% lower as the month ended, putting the pound back to its lowest level in more than two years against the US dollar.
The US dollar has been stronger across the board recently but the weakness of sterling has been compounded by the ongoing gloomy outlook for the UK economy, coupled with the expectation that there could be an interest-rate cut before the end of 2008.
(IG Index price data: compiled 4 September 08)
IG Index Gold Spread Betting
"Gold hits fresh 2008 lows"
The strength of the US dollar also took its toll on the price of gold. Back in March we saw all-time highs for the yellow metal but since then it has not had the same sort of momentum.
In August the price broke below the $850 support level and eventually traded down to the $775 area before bouncing back. The strength of the US dollar played a part in this but gold has also been caught up in the recent weakness seen across many commodity markets. Oil, of course, has been the other high-profile casualty, dropping back towards the $100 per barrel mark.
Back in November last year, the $770 area did manage to underpin further weakness in the price of gold and this area is likely to be a key focus for traders in the light of any further weakness in September.
(IG Index price data: compiled 4 September 08)
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.
IG Index provides an execution-only service. The material above does not contain (and should not be construed as containing) investment advice or an investment recommendation, or, an offer of or solicitation for, a transaction in any financial instrument. IG Index accepts no responsibility for any use that may be made of these comments and for any consequences that result.
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It 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.
'IG Index Review of August' by IG Index, updated 10-Sep-08
For related pages also see:
IG Index Review of October, updated 10-Nov-08
The last few months have seen the banking sector in the limelight as the sub-prime drama continued to unfold. But a major casualty of the recent slowdown has been the mining sector which is...read article. IG Index Review of September, updated 09-Oct-08
When the US first announced a $700 billion bail-out of the financial sector, the indices staged significant rallies. But when the initial vote on 29 September failed to pass the bill, the Dow Jones recorded its biggest...read article. IG Index Review of August, updated 10-Sep-08
The strength of the US dollar took its toll on the price of gold. Back in March we saw all-time highs for the yellow metal but since then it has not had the same sort of momentum. In August the price broke below the $850 support level and eventually traded down to ...read article. IG Index Review of July, updated 07-Aug-08
The second half of July saw a significant bounce-back, with the FTSE 100 up around the 5400 level. The big question in the weeks to come is whether...read article. IG Index Review of June, updated 06-Jul-08
The second half of May saw weakness creeping into the UK blue-chip index and this really gathered momentum in June. Although there were brief signs of strength throughout the month, the FTSE 100 still lost more than 400 points and dropped back to levels not seen since...read article. IG Index Markets May, updated 09-Jun-08
The price of oil is seldom out of the news for long and last month was no exception. May saw the multi-year trend for crude oil continue, with the July contract pushing out to $135 a barrel. That is a 35% gain for this year already and more than double...read article. IG Index Markets April, updated 07-May-08
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...read article. IG Index Markets March, updated 04-Apr-08
After a period of sideways trading in February, the bearish sentiment returned to the UK stock market in March. By the end of the month, the FTSE 100 was down by more than 11% for the year to date. The worst start to a year since the...read article. IG Index Markets, updated 04-Mar-08
Monthly Review: 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...read article. IG Index Spread Betting Markets, updated 01-Feb-08
Monthly Review: Where next for the major world stock markets? During January, the FTSE 100 traded back to levels not seen since October 2005. This has left many concerned that this kind of a decline is not a healthy correction but a sign of things to come. Going into February, the market has regained the 6000 level but it is probably fair to say that ...read article.
Q) Average Trading Results?
A) Get free spread betting tips, offers, price updates, important news and more! All Free - Click here!
Risk Warning: Spread betting carries a high level of risk to your capital and you may lose more than your initial investment. It 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.
* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.
