The regular monthly spread trading review from IG Index.
The Month Ahead
Economic Data Likely to Add to Volatility
Although financial markets around the world have seen the traditional drop-off in volumes as summer gets under way, volatility has remained high, and July saw impressive moves across a wide variety of asset classes.
Concerns about a double dip recession for the UK were calmed to some extent by the latest GDP data which showed better than expected growth of 1.1% during the second quarter of 2010. However, to muddy the waters, US GDP came in slightly worse than expected at 2.4%
The stability, or otherwise, of the economic recovery is likely to continue to dominate investors’ thoughts in the month ahead.
Any data that helps provide further insight, such as the US unemployment numbers on Friday 6 August, and the monthly statement from the Federal Reserve on Tuesday 10 August, is likely to add to the volatility of markets as the month goes on. Particularly for stock market indices and forex spread betting markets.
FTSE 100 Spread Betting Market News
Will the FTSE Push Through 5400?
During July 2010, the FTSE 100 index rose by 7%, putting in its best monthly performance since July 2009. However, this needs to be viewed in context: in early July the index was plagued by concerns about the economic recovery, acutely affected by debt levels in European nations and had BP weighing on its performance.
The beginning of the month saw the index plunge to its worst levels since last September. The rebound from this very depressed state makes the FTSE 100 an interesting one to watch going into August.
Since May, the FTSE spreads have repeatedly run out of steam in the 5400/5450 area. This is the next big level the technical traders will be watching closely to see if this time around momentum can keep the market going and finally crack this barrier.
UK Shares Spread Betting Update
BP Continues to Rebound
The woes of BP, following the oil leak in the Gulf of Mexico, have been well-documented and by the end of June the share price had more than halved from its April highs, wiping more than £50 billion off the market value of the oil giant.
However, as progress was made in capping the leak, and with the company ousting chief executive Tony Hayward at the end of last month, the spread betting price rose by 25% in July.
While August is unlikely to deliver the sort of volatility that the share price has seen over recent months, it is still likely to attract a degree of investor attention in the weeks ahead.
It has just started the process of, hopefully, finally sealing the Gulf oil leak and, as we saw over the past few months, the success or otherwise of the various steps here can have a correspondingly large impact on market sentiment.
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 July 2010' edited by IG Index, updated 06-Aug-10
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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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