Shares Spread Betting: Diamond Leaves Barclays After LIBOR Scandal
Spread Betting 3 July 2012
The longer Bob Diamond stayed on as CEO of Barclays, the more bad press the bank would have received as calls for his resignation would have grown and grown.
Whilst most people don't actually know what LIBOR is, the headlines make for bad reading, especially with bank bashing remaining rife.
Let's face it, no one would want to be the head of a bank that is embroiled in this issue when they have to face the Treasury Select Committee this week.
The fact that he's taken this step doesn't come as a huge surprise after the resignation of the Chairman.
When it boils down to it, the banks have been playing the market for their own benefit. That is true even if all they were doing was creating the liquidity and flow to provide a lower price at which to lend money to each other.
Bob Diamond has only been CEO for a short time, but he was seen as a figure head for the overall banking sector and one of the best in his field. At least his appearance in front of the MPs should be a little easier.
Barclays shares dipped by some 4% on the open, but they have already climbed back from the lows and pushed back into positive territory.
Shares spread betting investors seem to have been quick to brush the issue aside, however we now have to consider the ramifications for the other banks under investigation.
How far will the scandal go from here? Barclays is likely to be just the first of many banks to be fined and so there will be several nervous CEOs out there.
The FTSE had been called to open some 15 points higher but the banking sector initially dragged us lower following the news of Diamond's resignation. Nevertheless, those early losses have now been reversed and the index is currently up by 10 points.
Yesterday, the market closed right on its near-term resistance levels and is testing them again this morning.
The bulls will be hoping that a move above 5650 will open the way for 5715 and then 5760. On the downside, support is at 5615, 5585 and then 5540.
Whilst the economic data has not exactly excelled recently, there has been the odd glimmer of hope.
Yesterday's UK manufacturing PMI, whilst it was still pointing to contraction, did come in higher-than-expected. We also saw a couple of slightly higher-than-expected Chinese PMI numbers which have given metal prices a little boost.
For the UK, the PMI surveys have been consistently pointing to an economy that is in much better shape than the official GDP figures suggest. Therefore, it seems that businesses are busy making their orders and feeling a little more confident, but this is yet to filter down into the wider economy.
Today will the UK's construction PMI number. The construction sector has been a real drag on GDP lately, but today's figure is expected to improve.
The US dollar benefited from renewed safe haven demand yesterday, as weak manufacturing data triggered fresh concerns of a slowdown in global economic growth.
The resulting move saw the euro fall 71 points against the dollar, with the pair dropping to $1.2585.
Investors that are spread betting on forex should note that the ECB is expected to lower interest rates by 25 basis points during Thursday's meeting. This is expected to be part of the central bank's strategy to deal with the sovereign debt crisis.
The gold market fell back to $1596.9 yesterday, driven lower by a stronger dollar and slightly weaker US equities.
Commodity investors are wondering whether the EU has done enough to remove some of the immediate concerns or whether the ECB's expected rate cut will actually satisfy the markets.
Nymex crude oil prices lost $0.90 yesterday, closing at $83.75, as optimism regarding the EU's plan was quickly replaced by worries of another dip into recession.
By and large, yesterday's manufacturing data from around the world was disappointing and so this weighed on the energy markets.
It also seems that the ongoing Iranian threats to close the Strait of Hormuz were pushed to the back of traders' minds as they provided limited support.
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'Shares Spread Betting: Diamond Leaves Barclays After LIBOR Scandal' edited by SD, updated 03-Jul-12
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