The regular monthly spread trading review from IG Index.
IG Index FTSE 100 Spread Betting - September 08
"FTSE 100 slides on banking worries"
The stock-market recovery in August, the first positive month since April, ended up looking like a 'dead-cat bounce' by the end of September, as the market slid by more than 700 points. The reasons were well publicised and mainly centred around concerns for the global banking sector.
High-street banks such as HBOS suffered significant daily falls in share price, leading to a proposed merger between HBOS and Lloyds TSB and an FSA ban on the short-selling of financial stocks. The news led to a sharp bounce back at end of September but any short-term optimism has been shrugged off so far in October.
September saw the FTSE 100 slip back to levels not seen since 2004, leaving many worrying about how much deeper this crisis has got to run. Various government actions have so far had a limited effect in bringing optimism back to financial markets.
(IG Index price data: compiled 6 October 2008)
Dow Jones (Wall St) Spread Betting
"Wall Street suffers biggest ever points fall"
The banking crisis originated in the US with sub-prime lending and the subsequent fall in the housing market. September saw some steep falls in American markets and some dramatic events as the month evolved.
First of all, there was the effective nationalisation of the two mortgage giants Fannie Mae and Freddie Mac. When news of this broke, some hoped that this would signal the beginning of the end of the credit crunch. But soon after, Lehman Brothers went bankrupt, sending another shock wave across markets.
When the US first announced a $700 billion bail-out of the financial sector, the indices staged significant rallies. But when the initial vote on 29 September failed to pass the bill, the Dow Jones recorded its biggest ever one-day fall. Going into October, markets have remained under pressure with this index trading below the 10,000 mark.
(IG Index price data: compiled 6 October 2008)
IG Index Oil Spread Betting
"Crude Oil back below $100"
For some people the one positive from the current economic slowdown has been the drop in crude oil prices. Back in July the multi-year uptrend was still very much in effect and oil hit a record of $147 per barrel.
Since then however we have seen a significant trend reversal as a number of speculators think the slowdown will lead to a drop in oil demand. During September, the price moved back towards $90 per barrel before rallying briefly above $100.
In early October, further worries about a lack of demand have weighed on the price as oil traded below $90 per barrel, its lowest level in more than seven months.
(IG Index price data: compiled 6 October 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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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 September' edited by IG Index, updated 09-Oct-08
Index of UK financial market trading articles - the regular closing market comments from IG Index...see Index.
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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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