Where Next for the UK and US Spread Betting Markets?
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Investors had few places to hide recently as commodities, bonds and stocks fell on fears that China may raise interest rates. However it’s been a double dose of concern as investors are also wary of Ireland's dubious debt position.
The Shanghai stock market suffered its worst loss in over 14 months recently after rumours swept through the markets that more monetary tightening was imminent. China is feeling the need to tighten money supply in order to stem rising Chinese prices, especially in the housing sector.
Global stock markets have also fallen as Ireland's borrowing costs hit another euro-lifetime high, whilst some investors are concerned that that the Federal Reserve’s move to buy $600bn in Treasury debt may have unintended consequences.
A decline in initial US jobless claims had some analysts suggesting the US economy was starting to gain traction after many months of sluggish growth. Claims for unemployment benefits have fallen more than expected. A US government report showed that the monthly moving average fell to a two-year low, giving some relief to investors
What does all this mean for the world stock markets? According to a report from spread betting company City Index, with momentum falling and divergence patterns appearing, the concern for further falls can’t be ruled out yet. “The intermediate term bullish trend, however, is still intact and some investors might be looking to buy into the dips. If we don’t take out the highs, and form lower highs, then we may see a change in trend in the near future,” it read.
Looking in more detail at the UK’s FTSE 100, the report said that further rallies are not out of the question. “As long as the index stays above the support level of 5630 then a rally to 6050-6117 is certainly still possible. However a breach of 5630 could well see declines towards the 5588-5630 level. The fall below 5748 should be watched as this could also suggest that the move to the downside may not be over just yet.”
In the US markets a bearish signal has been confirmed for the Dow Jones. A break of 11215 saw the Dow trade lower and the short term trend has now changed as the Parabolic SAR indicates. Instead of calling a top, spread betting investors want to wait for further confirmation by closely watching 11020, which was November’s key support level.
If this level is broken, we may see the Dow Jones trade towards 10694-10873. We have seen momentum turn lower rather sharply for the first time in three months. This should be monitored for any further bearish implications.
Spread Betting Indices - Spreads Comparison
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| FTSE 100 Daily - Spread Size |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
| FTSE 100 Daily - Min Stake |
£1 |
£0.50 |
£2 |
£1 |
£1 |
£1 |
£1 |
£1 |
| FTSE 100 Future - Spread Size |
4 |
4-8 |
6 |
4 |
4 |
3 |
4 |
4 |
| FTSE 100 Future - Min Stake |
£1 |
£0.50 |
£2 |
£1 |
£1 |
£1 |
£1 |
£1 |
| Wall St Daily - Spread Size |
2 |
1 |
2 |
2 |
2 |
2-4 |
2 |
2 |
| Wall St Daily - Min Stake |
£1 |
£0.50 |
£1 |
£1 |
£1 |
£1 |
£1 |
£1 |
| DAX 30 Daily - Spread Size |
1 |
1 |
1 |
1 |
2 |
1 |
1 |
1 |
| DAX 30 Daily - Min Stake |
£1 |
£0.50 |
£2 |
£1 |
£1 |
£1 |
£1 |
£1 |
| S&P 500 Daily - Spread Size |
4 |
4 |
5 |
4 |
3 |
5 |
4 |
4 |
| S&P 500 Daily - Min Stake |
£1 |
£0.50 |
£1 |
£1 |
£1 |
£1 |
£1 |
£1 |
| Nasdaq 100 Future - Spread Size |
3 |
4-10 |
4 |
3 |
3 |
4 |
3 |
3 |
| Nasdaq 100 Future - Min Stake |
£1 |
£0.50 |
£4 |
£1 |
£1 |
£1 |
£1 |
£1 |
Comparison Notes
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It 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 Financial Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Where Next for the UK and US Spread Betting Markets?' edited by DB, updated 19-Nov-10
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