Spread Trading 19 Oct 10
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Trading 19 Oct 2010
The financial spread betting market continues to oscillate around its highs as investors are reluctant to get too over exposed to UK stocks ahead of tomorrow’s government spending review.
Headlines are rife with cuts here and slashes there and the coalition will do well if they come through this week without too much damage.
Lib Dem supporters remain angry that their vote was for a party that promised to prevent much of the cuts but now see much of what they wanted being brushed aside by the Tories.
What beats me is that Lib Dem supporters voted for a Lib Dem government and that’s what they’ve got. A year ago it was unconceivable that so many cabinet ministers would be Lib Dems, let alone the Deputy PM.
The pain will be hard to bear as taxes rise next year and unemployment rises as a result of the cuts. The knock on effect for the private sector is unclear and still there’s nervousness that it will lead to a double dip.
At least the BoE’s on hand to get the printers rolling again and dish out more cash, because as we’ve regularly commented the best way to solve a problem is to throw money at it.
The FTSE is getting a little dizzy around and above the 5700 mark. It’s still to test the 2010 highs above 5800 and just seems to have run out of momentum at the moment.
Our spread betting account holders continue to sell at these levels expecting the resistance to hold strong and the index to head lower testing support. 5770 remains the near term hurdle for bulls whereas bears will be expecting a test towards the 5660 and then 5630 area.
Economic sentiment data from Germany this morning has come in slightly better than expected so German Dax stocks are trying their best to find the good in a bad situation and are putting in a small gain. The FTSE is flat having drifted in and out of gains and losses all morning.
On the data front the only highlight left today is US housing starts, which are expected to fall back from their previous month’s figures.
There is still so much supply of housing stock in the US and with the recent controversy surrounding foreclosure sales, one wonders why they’re managing to building any houses at all.
FX spread betting markets are just favouring the Dollar again this morning as the majors continue to sit below the big figures. EUR/USD is not so bad, having had a boost from the Germany ZEW survey, but remains below $1.4000 at $1.3940. On the other hand, Cable, which made an attempt at $1.6000 yesterday but failed, is back around $1.5830.
Gold managed to attract the buyers once again after its initial sell off and is back around $1370 this morning having done very little so far this session and in Asian trade overnight.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'Spread Trading 19 Oct 10' edited by SD, updated 19-Oct-10
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