The regular monthly spread trading review from IG Index.
IG Index FTSE 100 Spread Trading - December 08
"FTSE 100 stages end-of-year bounce"
December saw the FTSE 100 Index continuing its recovery from the November lows of around 3700, to finish above 4400, the first positive monthly finish for the UK index since August. The markets are, however, still down by more than 30% on the year.
The gloomy economic news continued throughout December, with unemployment increasing, house prices continuing their fall and focus switching to the plight of car manufacturers in the UK. But share prices managed to shrug off these events right through December, leaving many investors wondering how much of the ongoing bad news was already being priced in by the markets.
Going into 2009, the November highs of around 4700 will be the next big level watched by traders. Back in November, the recovery ran out of steam around the 4700-mark, and the index once again headed back below 4000. This time, traders will want to see these highs broken in order to confirm that this rally has any significant strength left to it.
(IG Index price data: compiled 8 January 2009)
Spread Betting on the EUR / GBP
"Euro extends gains against sterling"
November proved to be a good month for the euro, but this was nothing compared with the gains made by the currency against sterling by the end of last year. During December, the euro climbed to 98 pence – a gain of almost 20% on the month.
It was the continued grim sentiment surrounding the future of the UK economy that weighed on the pound through December - traditionally the time of year when volumes across all financial markets are drastically reduced, resulting in some exaggerated shorter-term moves.
It remains to be seen whether the EUR/GBP rate is going to hit parity, where one euro buys one pound. The pair came close to this level in December, and this will continue to be the focal point in 2009.
(IG Index price data: compiled 8 January 2009)
Spread Betting on Crude Oil
"Oil in free fall"
The drop in oil showed few signs of slowing in December, with the price of a barrel of crude trading below $36 – a fall of 75% from the all-time highs seen only five months earlier.
It was the same old story - a global economic slowdown translates into a significant decline in fuel demand – driving prices lower. During December, oil producing cartel OPEC agreed to a record cut in oil production. So far, however, this seems to have had a minimal impact on the price of oil.
With the last five months having seen a steady procession of lower highs and lower lows, rallies have proven to be unsustainable so far, with some commentators forecasting $25 as the next target. Whether this is achieved remains to be seen, but the price of crude oil is likely to remain in the limelight in 2009.
(IG Index price data: compiled 8 January 2009)
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 Review of December' edited by IG Index, updated 13-Jan-09
Index of UK financial market trading articles - the regular closing market comments from IG Index...see Index.
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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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