The regular monthly spread trading review from IG Index.
IG Index FTSE Trading - July 08
"FTSE 100 slips to three-year lows"
The weakness that plagued the market through June continued into July. By 16 July the UK blue-chip index had lost more than 1200 points in less than two months.
And it was the same old pressures that were driving the market lower: ongoing negative news about the wider economic outlook; continued pressure on the banking sector; and a gloomy outlook from retailers such as Marks and Spencer.
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 this is the start of a more meaningful recovery by the market – or just another dead-cat bounce before the index slips to fresh lows.
(IG Index price data: compiled 4 August 2008)
IG Index Banking Sector
"Banking sector still under the cosh"
It's almost a year since the news about Northern Rock broke and since then, the banking sector has seldom been out of the headlines. July was no different as the share prices of high-street banks continued to plunge with Barclays, RBS, and Lloyds TSB seeing sizeable daily declines and slipping back to levels not seen for many years.
The HBOS rights issue also came into focus in July. This had been set at 275p per share when the price of HBOS had been much higher. With the price slipping, this became an unattractive offer for shareholders with less than 10% taking up the rights. HBOS then rounded off the month by reporting that profits in the first six months of its financial year had dropped by 70%, when compared to the same period last year.
(IG Index price data: compiled 4 August 2008)
IG Index FX Markets
"Oil suffers biggest decline for more than a year"
The price of crude oil this year has perhaps lulled some traders into thinking it was a 'one-way' bet which could only go up. By the middle of July the price of 'black gold' was up by a good 45% for the year to date, trading just above the $147 per barrel mark.
But then the price began a decline that saw it trade down towards $120 by the end of the month. There were worries that the price and global economical slowdown would result in reduced demand, particularly from Asia and the US.
The end of July saw oil trade back to levels not seen since early May. Whether this turns out to be the first sign of the oil bull market starting to stall remains to be seen, but because of oil's influence across a whole range of markets and economies it's always worthwhile keeping an eye on
(IG Index price data: compiled 4 August 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 Review of July' edited by IG Index, updated 07-Aug-08
Index of UK financial market trading articles - the regular closing market comments from IG Index...see Index.
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