UK Spread Betting Markets Remain Supported Despite Struggling Retailers
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 8 November 2011
The gloom for the UK consumer and high street continues with no signs of improvement.
The concern for many retailers is that they face an uphill battle in the run up to this Christmas with consumers tightening their belts significantly.
Not only will smaller independent retailers struggle but big ticket items are not expected to do well.
New dish washers, televisions and fridges are the last thing on people’s minds at the moment and, with a housing market that is still heading lower outside London, these items will remain a no go area for consumers.
Those retailers who don’t have exposure to emerging markets and are just cooped up in the UK are going to find things hard going forward.
It seems that discretionary spending has almost totally disappeared, unless you are one of the few who can afford the finer things in life such as the Burberry coat, Boodles jewellery or a new Ferrari. Top end items have not suffered anywhere near the sort of decrease in sales seen elsewhere as the super rich continues to spend, spend, spend.
Despite the tough headwinds faced by the high street, the UK spread betting markets don’t seem to be taking any notice. The FTSE continues to be relatively well supported and, since bouncing off the important support level around 5400, it has oscillated around 5500.
This morning we seeing a few tentative buyers push us a few points higher to 5550 at the time of writing.
All eyes are on Italy today as Berlusconi is having his premiership put to the test. Rumours that he’ll step down have been doing the rounds this morning which gives a little indication as to what the markets think of his leadership.
Italian government bonds will also be closely watched, as yields have retraced from their earlier highs on the resignation rumours. It’s amazing how a leader of one of the world’s biggest economies now uses his Facebook page to reject the rumours.
Economic data is thin on the ground today although there’s manufacturing and industrial production from the UK.
A rise is expected for the month of September, following the relatively decent PMI figures released back then, but we know this probably won’t last as the PMI data for October was poor, coming in below 50.
Forex traders fled the riskier currencies and piled into safe havens such as the dollar and yen. Having said that, we could see a hefty jump in the euro if Berlusconi does step down.
The euro has been trading sideways in a tight range against the dollar, and it seems traders are just waiting to see what the next moves are. EUR/USD is trading at $1.3760 with support at $1.3650 and resistance at $1.3820.
Since the 6th September, gold has seen 20% erased from its price after investors have sought new safety havens and banked profits from the precious metal. This slump ended on the 25th and now a recovery path is being formed once more.
Yesterday’s session saw the metal’s safety haven status return as a $30 rally took place, bringing the yellow brick up to $1794.5.
The dominating reason behind this hike was the concern that Italy isn’t far off from joining Greece in the dog house after reporting that borrowing costs were at all time highs. At time of writing the shiny metal is having a breather and trading down at $1787.9.
Despite the limited gains in the equity markets and the small increase in the US dollar, crude oil spread betting prices furthered their gains during yesterday’s trading.
One would look at the black gold’s trading and assume that it is more driven by the resilient US economy, as opposed to the faltering Eurozone.
With commodities analysis supporting the rally, peripheral investors may be waiting to get involved once key upside levels have been reached. Brent currently sits at $115.39.
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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'UK Spread Betting Markets Remain Supported Despite Struggling Retailers' edited by SD, updated 08-Nov-11
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