Wall Street Spread Betting Market Rises as Berlusconi Prepares to Resign
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 9 November 2011
Wall Street saw gains overnight, on the news that Silvio Berlusconi will be stepping down as Italian Prime Minister, pushing above its 200 day moving average.
The FTSE 100 remains some way from its own 200 DMA, which is around 5700, and is now seeing some of its early strength fading. At the time of writing the FTSE is below the 5600 level at 5575.
Even if a few sellers are creeping in early on it must be demoralising for Italy’s Prime Minister to see that shares spread betting markets have held up pretty well considering his announcement to resign.
The bond yields on Italian debt remain at worrying levels; however they haven’t quite jumped up to the really critical 7% level yet, seen as the bailout level, so investors are still giving them the benefit of doubt.
There’s nothing to report on the economic data front really apart from some Chinese numbers out overnight. These saw inflation dipping a little and retail sales and industrial production holding up well, all coming out in line with expectations.
The euro received a bit of a boost on the back of Berlusconi announcing he’ll step down and the news of the formation of a “caretaker” Greek government which is to take them into the next election.
Traders can expect EUR/JPY to see a continuation of the recent volatility as the yen has crept higher again causing the Bank of Japan to mention they will intervene further to make their currency weaker.
The euro is trading lower this morning against the yen at ¥106.95, breaking below its previous support level, which could signal heading towards ¥106.50 where it finds its next support level.
Spread betting investors didn’t seem to pay attention to the fact that gold broke the psychologically important level of $1800.0, not reached since Sept 21st, in yesterday’s session.
The precious metal actually ended the day down $8.7 at $1786.8 after Italy, the newest member of the EU to find itself struggling in the current economic climate, was perceived as being solvent but having liquidity issues.
Now that the Italian Prime Minister has announced he will step down, it looks as though investors think there will be less uncertainty and therefore are booking profits in gold, allowing them to dip into riskier assets.
The US dollar was out of favour yesterday as risk-on trading was the day’s leader.
Traders were in search for higher-yielding assets like equities and commodities, where crude oil is at the top of the list.
Fundamentally, the need for crude oil in the US has slumped recently but on the other hand a decline in supply has been reported, bringing support back.
Iranian issues were also back on the agenda, threatening to disrupt supplies, as a leaked report indicated that the International Atomic Energy Agency is about to accuse the Middle Eastern country of running a nuclear weapons program.
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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'Wall Street Spread Betting Market Rises as Berlusconi Prepares to Resign' edited by SD, updated 09-Nov-11
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