The regular monthly spread trading review from IG Index.
FTSE Spreads Report
FTSE Celebrates 12 Months Of Recovery
The recovery seen by the UK stock market in the second half of February continued with barely a wobble in March.
This drove the FTSE 100 out to its best levels since June 2008 and showed that the 12-month recovery was still going strong.
Continued optimism for global economic prospects, and a degree of calm following EU leaders agreeing on a financial aid package to help out Greece, helped to keep investors in a positive frame of mind for much of March.
There had been some concern that the immediate highs at 5650 would present a barrier for the FTSE 100, but these proved to be unfounded as the index sailed through with barely a pause.
These gains have now left many eyeing up the psychological 6000 level as the next medium-term target for the UK blue chip index. It is almost 22 months since the FTSE was last above here.
Recent gains have left stock markets looking a little overheated but investors and traders alike have been happy to view any weakness as just another buying opportunity. It will be interesting to watch if this remains the case in April.
Forex Spread Betting News
Pound Starts the Month With A Bump
Coming into March, GBP/USD was already weak following a break through the $1.5700 level that had propped the market up for the previous 8 months.
However, no-one was expecting the turmoil that ensued at the beginning of the month. By lunchtime on March 1 the Pound had dropped by more than 400 points against the US Dollar.
There was confusion over what had caused such a sharp sell-off, with some blaming weekend polls that suggested the result of the imminent UK general election was pointing towards a hung parliament, with no one party holding a workable majority.
Traditionally, of course, this means a weak government. Not exactly what markets want to hear when we are emerging from a recession and carrying a significant burden of debt.
Others claimed that it was the decision by Prudential to take over an Asian subsidiary of AIG, and fund the purchase through a rights issue, that spooked sentiment.
Whatever the reason, once again it demonstrated the volatility potential of forex and by the end of the month GBP/USD had carved out a 600 point range.
The lows from 1 March were tested again but held so the $1.4800 area will be one to watch if the Pound decides to take another dive in April.
Mining Sector Spread Betting Report
Mining Sector Hits 20 Month High
The various mining stocks play a pivotal role in the fortunes of the FTSE 100 index.
Because there are so many making up the index, and because they are in the main large-sized companies, a good or bad day for this sector usually has a corresponding knock-on effect for the FTSE.
Miners have been in recovery mode since early 2009. The feeling was that global economies were finally starting to turn the corner and a resultant increase in demand for raw materials like copper led to a pick up for the mining shares.
Sentiment about the strength or otherwise of the recovery still plays a big part in day-to-day movement of miners’ share prices.
It can be easy to spread bet on the mining sector with IG Index as you don’t have to deal in the individual shares.
This month saw the sector move through the 24,000 mark, back to levels not seen since July 2008, and has left investors wondering about the possibilities of a run back to the all-time highs up above 30,000.
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 March 2010' edited by IG Index, updated 07-Apr-10
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