The regular monthly spread trading review from IG Index.
The Month Ahead
Central Bank News on Further Easing May Lead to Spread Betting Market Volatility
Various spread betting markets experienced big moves in September, with the major stock indices managing to shake off the weakness that had dogged them in August.
The US Dollar, however, came under pressure, particularly from the Euro which continued to claw back some of the ground lost in the first half of the year.
Gold, often perceived as a safe haven, was relentless in setting fresh all-time highs.
Investors remain concerned about the fragility of the economic recovery, which means there are some potential market-moving events to watch out for during October.
Keep an eye on the monthly US Non Farm Payrolls, which, uncharacteristically, are released on the second Friday of the month (8 October). Current expectations are for a drop of around 15,000 jobs in the USA during September.
Other big events that may result in widespread volatility are the central bank interest-rate announcements. No change to the base rates are expected, but with both the US Federal Reserve and the Bank of England refusing to rule out further Quantitative Easing to underpin recovery, any signs of additional measures on the horizon could see strong reaction across a range of assets.
FTSE 100 Spread Betting Report
FTSE Reaches Four Month Highs
After a poor performance in August, stock markets started the month with a surge, eventually pushing the FTSE 100 to its best levels since May.
Some analysts have interpreted this as a significant indication of more strength to come, particularly with the index finally cracking the 5500 barrier that had been a real obstacle throughout the summer.
Going into October some of the momentum has slowed. Investors have been buffeted a little by conflicting data regarding the state of the recovery and significant concerns remain. The big question is whether the markets have got ahead of the real economy.
The latest quarterly earnings season, which kicks off again in the US, may well shed some light. Expect a bit more insight into how well, or otherwise, individual businesses are coping, and whether there is likely to be further upside for the FTSE.
Gold Spread Trading News
Gold Continues Relentless Rise
Anyone with a passing interest in the financial markets will be aware that the gold spread trading market has been rising for a number of years. This trend continued in September as the yellow metal once again set fresh all-time highs through $1300 per troy ounce.
Classically seen as a safe-haven and a hedge against inflation, concerns over inflation levels certainly didn’t harm the yellow metal in September. It could be argued, however, that the bulk of the rise was driven more by US Dollar weakness than anything else.
Data from the World Gold Council in September also showed that European central banks had all but stopped selling gold in 2010, down by more than 95% from the previous year.
Whether this will be viewed as positive or negative remains to be seen, but the usual investor concerns of inflation risks, an uncertain recovery and another potential round of Quantitative Easing in the US should ensure that gold will remain a fascinating market to watch in the coming months.
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 2010' edited by IG Index, updated 05-Oct-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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