The regular monthly spread trading review from IG Index.
FTSE 100 Spread Betting News
FTSE Ends Year on a Strong Note
December is always something of a strange month for stock markets, with the attention of investors dwindling as the festive period approaches and trading volumes seeing a marked drop off.
This month was no different and for much of the time the FTSE 100 was stuck in a directionless tight range.
However, enthusiasm returned towards the end of December, and the blue chip index pushed higher, hitting its best levels for 2009 just before the year ended. This has raised expectations that the recovery from the March lows still has some legs and has left a few investors hoping for a similarly bullish start to 2010.
There is plenty for the market to focus on at the start of the New Year as retail giants such as Marks and Spencer and Sainsbury’s announced increases in sales.
With the number of people shopping at the Christmas sales up by nearly 20%, compared to 2008, it will be interesting to see how stock markets react to this data and should offer insight into just how confident the UK consumer is that the economic recovery is here to stay.
(IG Index price data: compiled 4 January 2010)
Crude Oil Spread Trading Update
Oil Pushes Back up to Year Highs
After spending much of the year recovering strongly from the sharp sell-off in the second half of 2008, the last couple of months have been a disappointment for oil bulls as the commodity gradually edged lower.
From February to October, oil had rallied by around $40 a barrel, so there was always scope for something of a pullback – and it looks likely this early winter weakness was just that.
In the second half of December the price of oil rallied strongly, with the February contract trading shy of $80, which put it slightly below the highs for 2009.
The cold weather is playing its part in the recent strength but the bigger driver for prices in 2010 is likely to be the rate of any further economic recovery. For now, prices appear to be strong – whether oil can return to the benchmark $100 a barrel price remains to be seen.
(IG Index price data: compiled 4 January 2010)
Forex Trading Report
Key Level Props Up Pound for Now
Although December is traditionally a quiet time of year for markets, there was plenty going on in forex. The theme for the month was the resurgence in the US Dollar against a host of other currencies.
One of the catalysts for this turn around in fortunes were better-than-expected US unemployment numbers released at the beginning of the month that pointed to the possibility of further recovery for the world’s largest economy.
This gave a lift to the Dollar – and led to a subsequent slump in the value of GBP/USD. At its lowest point in December, the currency pair had slipped back towards $1.5800 – levels not seen since the middle of October.
Back then this zone was identified as a pivotal area and proved to be the turning point for GBP/USD as it rallied 1000 points higher.
Whether this proves to be the case this time around remains to be seen, but with various major factors playing out this year, the size of the UK deficit and the prospect of a general election being just two, 2010 should be another interesting year for GBP/USD.
(IG Index price data: compiled 4 January 2010)
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 2009' edited by IG Index, updated 11-Jan-10
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