The regular monthly spread trading review from IG Index.
FTSE Spread Betting Update
FTSE finds its feet
The first week of February was plagued by the same weakness that had affected stock markets for much of January, and the FTSE 100 slipped to levels last seen in early November 2009.
News from European economies only increased the pressure, as the high levels of debt carried by the likes of Portugal, Spain, and in particular, Greece continued to spook markets.
It was also unclear if the rest of the Eurozone was going to bail Greece out, and what form any potential rescue would take, adding to market volatility in the first part of February.
But as the month went on, concerns here were put on hold for the short-term and positive news from the banking sector, especially from Barclays, helped to lift sentiment.
On the last day of the month, upward revision of the fourth-quarter UK Gross Domestic Product data helped steady nerves, and the FTSE 100 finished off at its best levels in more than a month, leaving traders a bit more hopeful for further gains into March.
(IG Index price data: compiled 2 March 2010)
Forex Spreads News
Euro continues to slide
Although stock markets managed to turn their fortunes around during February, the gloom for the Euro continued. The EUR/USD pair has been in decline since early December 2009 and at its worst point dropped by more than 10% from last year's highs.
Forex traders' main focus was once again on Greek economic concerns for much of the month, with speculation as to the chances of a rescue by European finance ministers provoking some big swings in the market.
All of this uncertainty in Europe worked in the favour of the US Dollar, which investors again turned to as a perceived ’safe haven‘, further denting the Euro.
Although there was some recovery towards the end of the month, high-deficit economies were still causing concern and look likely to continue dominating news, at least over the medium term.
At the moment the $1.3400 mark has emerged as a floor for EUR/USD, but it remains to be seen just how strong this will prove to be.
(IG Index price data: compiled 2 March 2010)
Crude Oil Spread Betting Report
Oil support holds
It has been a volatile year so far, as can be clearly seen from a chart of crude oil over recent months.
The commodity pushed out to fresh recovery highs in early January, with April Crude getting within a whisker of $84 per barrel, its highest since October 2008.
But of course one of the driving factors behind the price of oil at the moment is the perceived rate of economic recovery. As concerns arose earlier in the year that this may not be at the pace first thought, it was hardly surprising that oil took a tumble.
By the first week of February prices withdrew as far as $70 per barrel, the level at which the last slide bottomed out back in December.
This proved to be the case again, and prices rallied back up through $80.
The last week or so has seen sideways trading at this level and oil will remain an interesting one to watch in the weeks ahead. Analysts continue to wonder if the $84 level can be broken and whether the black stuff can push out to new 17-month highs.
(IG Index price data: compiled 2 March 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.
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'IG Index Review of February 2010' edited by IG Index, updated 10-Mar-10
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