Stock Markets: 30 September 2011
So Goldman Sachs
have just released a report stating the 'Great Recession' we're in could potentially turn into the 'Great Stagnation'.
They think there's around a 40 percent chance that the major parts of Western society will go through extended and dawdling growth.
Good news for us Brits though, as they believe the countries with the highest chance of stagnation for eight years or more are Belgium, Italy, France, Austria, Japan and the US.
There's better news for the emerging market economies, such as Russia, China and India; Goldmans believe there is almost a zero percent chance of them hitting stagnation.
You could say this report won't exactly help the already nervous sentiment of the Eurozone debt situation, nor the economic outlook as a whole.
Meanwhile, Greek PM Papandreou is to hold a series of talks with Euro leaders to convince them that Greece can meet the demands of a tough austerity programme.
The Franco-German team will really have to push their ideas forward if any package is to be agreed in the near future. A big win for Chancellor Merkel to increase the bailout fund's firepower will also come as a strong relief for the Greeks' cause.
The UK 100
is down around 30 points this morning to 5170, following on from yesterday's 20 point downer.
The fall could be down to the decrease in demand for copper and their respective miners.
There are PMI figures coming out of China on Saturday, and traders could be nervous over these as the region is a big metals consumer.
In contrast, our neighbours from over the pond had a successful day's trading after better than expected initial jobless claims figures.
The Dow Jones rose 143 points to 11153, but the Dow futures are already pointing downward this morning.
Stock Markets: 29 September 2011
The indices markets have once again shown how investors are by no means convinced that the we are out of the woods yet when it comes to the Eurozone debt crisis.
The theme has been dominating the headlines for the last couple of years, but more so in the last few months. Markets now seem to be demanding that differences between countries are put to one side so that a solution can be reached ahead of the G20 meeting in Cannes at the beginning of November.
This morning the FTSE is seeing the nerves that set in yesterday just follow through to today. At the open we're back below the 5200 level at 5190 so a little softer.
With lots of important meetings and votes today investors will be focusing on whether the troika's visit to Greece will result in it receiving its next lump sum of bailout.
The harsh austerity medicine that Greece to taking in order to receive its bailout cash is starting to become unbearable for its population as tax rise after tax rise is complimented by spending cut after spending cut.
Also today the German vote will be monitored closely, not because the vote is expected to go against Chancellor Merkel, but to see just how big the rebellion within her own coalition party is.
If she loses the 'Chancellor's majority' then this could spell trouble for the ruling party and the opposition will start to call for an election. Such destabilisation is precisely not what the Eurozone needs right now.
There are also some important data releases today that'll be watched. There's EU confidence this morning, US GDP data along with the weekly initial jobless claims and then we end off with pending home sales.
Stock Markets: 28 September 2011
Bulls bought just about everything they could get their hands on yesterday as investors piled back into risk assets.
Technically there have been some very bullish candlestick formations on the daily charts of many markets with lots of hammers followed by a confirmation of a possible change in trend.
The hammers have been followed by some big bullish engulfing candlesticks and so those who have bought near these lows are getting excited that they've picked the bottom.
But as we've seen too many times in the past, those who attempt to buy the lows all too often have their fingers burnt over the next few days.
Volatility is dangerously high and makes for difficult trading conditions which are made even worse by the fact that no one knows what the outcome of the Eurozone will be.
This concoction of uncertainty continues to whip CFDs
markets around and if one or two of the important players say something the bulls don't want to hear we could be back down to the lows again.
The FTSE has been oscillating between 5400 and 5000, albeit below here on an intraday basis, for a few weeks now. However, we have seen several times in these scenarios that fortune favours the brave so committing to a position for a longer term view could pay off in the end.
This morning sees some of yesterday's gains being wiped out with the FTSE lower by 60 odd points to around 5235. This came after the Dow fell back from its highs towards the end of the session, proving in part the points made above.
Stock Markets: 27 September 2011
The moves of the last few days show just how difficult trading conditions are at the moment.
Just when you think that the world is coming to an end, a view which you wouldn't have been chastised for having last week, a sudden shift in confidence can turn things on a sixpence.
The strength we're seeing today is susceptible to an equally sudden change, especially if politicians dither following last weekend, a point that for many marked a turning point in the Eurozone crisis.
From a technical analysis point of view, the FTSE has yet to close below the psychological 5000 level and remains quite well supported, particularly when compared to its European counterparts.
Back towards 5200 at the time of writing, the strength from the Dow last night has followed through to the European session. The most important thing that last weekend's meeting of the G20 and IMF can achieve is a shift in confidence for consumers and business.
If they believe that the Eurozone crisis can be contained by the coordinated action of politicians then they will spend that extra money and invest the cash that they've been hoarding over the past couple of years.
Only this morning we've seen German consumer confidence come in slightly better than expected, which has also contributed to this morning's strength in equities. Later today the US releases their consumer confidence numbers which are expected to bounce from the diabolical drop we saw last month.
Stock Markets: 26 September 2011
markets are unsure of what to make of the weekend's developments.
The markets do know one thing for sure; it will take months of further discussions to agree exactly one what to do. It will then take even longer for all the EU states to ratify whatever it is that's agreed and most still haven't done this with the July agreement to extend the fund.
As a result the FTSE has been yo-yoing throughout the morning having been above and below 5000 a few times already.
At the time of writing we're just above there, but investors are still very much undecided as to whether anything has actually changed from last week.
Stock Markets: 23 September 2011
We end the week a very sour note. Stock markets have plunged and investors are rushing for the exit. It seems that nothing is safe except for the good old US dollar. When you get moves like that you know that risk aversion is at the forefront of investors' minds.
The losses incurred by equity investors in the space of just 48 hours are scary and comparisons are being made to the 2008 crash.
When you look at the daily charts
of the Dow Jones the moves of the past few months are eerily reminiscent of the period between May and August 2008. There was the initial sell off before markets had a bounce and then Lehman hit which sent everything south very quickly.
This time we've had a similar initial sell off and bounce, so have the losses of the last few days been the precursor to the next large leg lower? If so, 10,000 for the Dow Jones futures
market could be on our screens quicker than you think.
A combination of things compounded yesterday's sell off which started with Ben Bernanke's bearish outlook for the US economy and then economic data from around the world disappointed with worse than expected manufacturing data being a recurring theme.
When risk assets (and that includes gold) start to plummet like this then people are called up for margin and many have to liquidate their long positions, further adding to the selling pressure.
Even more worryingly for some European investors the French CAC 40 breached its recent lows and now is only a couple of hundred points above its March 2009 low. That's two and a half years of bull market wiped out in a month and a half - scary stuff.
It's at times like these that the level headed and rational thinking investors put to one side all the noise and underlying risks and boldly start buying stock after such hefty losses.
The problem is that it really does take a brave investor to buy after such a sharp retracement, particularly when most other people would tell you that you're mad. Even contrarian CFDs
traders would be having second thoughts at times like these.
This morning the FTSE is seeing a little bit of a relief rally up some 40 points to 5080 in answer to promises from politicians that they will address the current crisis. Sounds familiar? Well nothing can be expected from this weekend's meeting of the G20 so the little bounce we see early on could be very short lived.
That said, with no economic data for the rest of the day, the mass sell off we've seen in the last couple of days could well attract those bold buyers mentioned above.
The major support for the FTSE is 5000 which as yet is a level that the index hasn't closed below, although it has had a 200 point move below it intraday.
Below 5000 is 4940 and then 4800. Resistance is seen at 5150 and 5220 with of course the big level at 5400.
As mentioned, economic data has dried up for this week. The only thing we have seen released today has been French business and consumer confidence. These have come in slightly lower than expected but investors are becoming rather used to now.
Stock Markets: 22 September 2011
The index spread trading
markets are in negative territory and spectacularly so following a gloomy picture that was painted by Ben Bernanke last night.
They got what they expected from the Fed as Bernanke announced "operation twist", but what they didn't expect was a surprisingly bearish outlook for the world's biggest economy.
Equity markets have been bombarded by bad news after bad and this week looks to have been as bad as any so far.
Major banks across America and Europe have been downgraded on top of Italy's downgrade a few days ago. The focus has fully shifted back onto the banks again as concern augments about their exposure to sovereign debt.
On top of these, those Northern Rock type banks which relied so heavily on the money markets for funding are at risk of another credit crunch. Calls for a mass recapitalisation of Europe's banks are becoming greater which might help to stop the rot but will add further to the pressures on global economies many of which are going through a bout of austerity measures.
So the vicious circle goes on but it's the ever increasing threat of another recession that is really spooking UK CFDs
investors. The Fed's move to shift its balance sheet around in order to bring down long term interest rates was being pooh-poohed even before they actually announced it as being a measure that's simply not going to go far enough to bring down unemployment in the US.
On top of all this, more evidence that China's booming economy is coming off the boil was indicated this morning after manufacturing data showed its third month of contraction. We also get the European manufacturing PMI number this morning which is expected to fall and this follows a worse than expected number from Germany earlier, so things aren't so pretty there either.
All in all, the gloomy outlook doesn't translate into a particularly bright outlook for equity markets.
The FTSE 100 is down over three percent at the time of writing and much worse than where we were calling the market overnight. Just above the 5,100 area this is where the index bounced off a couple of weeks ago so support is seen around here, but a break below 5,100/5,075 could see a test of 5,000 pretty quickly.
Stock Markets: 21 September 2011
The UK Chancellor's nerve will be well and truly tested in the coming months ahead as the IMF has slashed their forecasts for growth with their expectations for Britain's economy to expand by just 1.1% as opposed to 1.5%.
Next year gets an even bigger downgrade from 2.3% to 1.7%.
But it isn't just the UK that has seen their growth forecasts reduced, but every major economy across the globe with the US being the worst off seeing their 2.5% GDP for 2011 prediction falling to 1.5%.
PSNB figures out today will show that government spending jumped in August after being flat in July and once again show just how hard it will be for the coalition target to meet its spending target this year.
Later on tonight the Federal Reserve will announce its interest rate decision and the market is hoping for some sort of stimulus package, whether that comes in the form of QE3 or the so called "Operation Twist" whereby the Fed sells shorter dated bonds so they can buy longer dated ones to bring their yield down.
For now, in indices, the FTSE 100 is unsure whether to fall on the side of the angels or not but is down some 20 points at the time of writing.
The ominous 5,400 level is staring UK traders in the face who continue to seem reluctant to take the index above that level.
Stock Markets: 20 September 2011
The Dow's little rally off its lows last night has not been enough to tempt buyers back into Europe this morning as investors continue in their bearish stance following a downgrade of Italy's credit rating by S&P.
Italy's coveted A+ is no more and on top of this they have been slapped with a negative outlook.
This sounds like a case of we've heard it all before as we all remember how the peripheral states all saw downgrade after downgrade pushing their government bond yields to unsustainable levels before requesting a bailout.
Italy's 10y government bond yield has been capped recently by the ECB purchases and it plummeted back to below 5% in August however since then has been gradually creeping back up again.
This morning the Italian bonds are higher again to 5.7% and judging by the chart it looks to be trying to get back above 6%.
No matter what a country's politicians do to try and temper investors with announcements of austerity, once the market has made up its mind it takes few prisoners.
The problem with Italy is that its debts are so vast that there's no way Europe will be able to bail them out and it is unthinkable just what ramifications of a default by them will have on the global economy.
The FTSE 100 has been quite volatile overnight with the Financial Spreads reaching over 5300 towards the end of the Dow's session only to reverse those gains pretty quickly.
We're now back in the mid 5200 range. Defensive stocks are in favour again this morning and banks are a little lower but at least not anywhere near as much as the thrashing they got yesterday.
So the FTSE is looking at support around 5200 and then 5100 with near term resistance at 5300 and then the major barrier at 5375/5400.
This trading range that we've been within since the sharp downside correction is reminiscent of the range bound trading we saw throughout 2011.
At some point there will be a break out but for now CFD trading
clients are enjoying the moves between the highs and lows which provide much more docile trading conditions than what we saw in August.
Stock Markets: 19 September 2011
EU politicians haven't learnt from the pressure exerted upon them by the markets and yet another meeting between EU finance ministers passes without any coordinated action.
The equity markets had priced in a slim chance that an agreement was going to be met. However with little more than hot air coming out of Wroclaw, this morning has led to some selling.
Equity markets had probably got ahead of themselves and deep down investors must have known that nothing would come out of the meeting. It's just yet another grandstanding opportunity by politicians to say "we really ought to do something about the eurozone debt crisis, as it's getting rather out of hand" and then pouring themselves another cup of coffee hoping the problem will go away.
The difficulty is that the leader of the European paymaster is becoming more and more unpopular at home having lost yet another regional vote to the opposition. So Merkel at this point in time would never sanction the idea of anything that the Germans will have to pay for. This is why nothing can be done as the architects of the European dream are unwilling to put their hands in their pockets to prevent the whole project imploding.
Well, at least there's a G20 meeting at the end of this week. They'll definitely come to a solution to save the world this time so everything will be fine.
So the FTSE 100 market is back below 5,300 as the selling pressure takes us lower and wipes out much of the hard work from last week. The 5,400 area once again has proved to provide a good selling opportunity as this is the fourth occasion that the index has retraced from the level in almost as many weeks.
Needless to say Financial Spreads
clients had been selling the index in the run up to and around the 5,400 level and rightly so. However, since the move down the profits have been taken and the FTSE 100 positions are looking rather flat at the moment.
There's nothing in the way of economic data today so all eyes will be on developments in the eurozone which have been dominating things over the past few weeks, no, actually the past few years.