Stock Market Update 14 October 2011

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Stock Markets: 14 October 2011

Will it won't it break through its near term resistance level? We're talking about the FTSE of course which is on the brink of failing to break above the 5400 level and beyond on the seventh attempt at trying.

The recent strength that followed the Merkozy announcement that they had agreed on a way forward to deal with the Eurozone debt crisis has now stumbled at this brick wall and since we've traded sideways.

With the delay of the next scheduled meeting, and a lack of further announcements regarding exactly what the plan is, investor's enthusiasm for the deal is in danger of running out of steam.

So far this morning we've had Chinese CPI data which has come in less than expected and this is welcome as it indicates that their tough stance on inflation is beginning to pay off.

In the past we've seen higher and higher inflation in China and the concern was that they were going to have to take drastic action to prevent a bubble from building.

This data helps to some extent in that people will take this as a sign that no further tightening is required from the Chinese central bank.

The FTSE is flat at the moment as we end the week relatively quietly and that's despite a ratings agency downgrade to Spain's' sovereign debt.

The likes of S&P and Moody are working overtime at the moment downgrading bank after bank and European country after European country which reminds us of the dangerous situation that the Eurozone is in.

However, the overriding feeling that something will be done to sort the out mess is keeping equity markets afloat and the FTSE remains just above the 5400 level at the time of writing.

On the economic data front, we get US retail sales which are expected to rise and thus maybe give a little bit of happy news for the financial spread betting markets after so much doom and gloom recently.

Soon after that is the release of the Michigan confidence with is also expected to rise a little after last month's improvement. Having said that, the recent rises do come following some big falls in previous months, but hopefully we can end the week on a high.

Stock Markets: 13 October 2011

The FTSE doesn't seem to care too much about the worsening situation of UK employment and is preoccupied with what's going on in the land of its biggest trading partner.

The Slovaks are making noises about passing the vote on the EFSF and investors remain relatively optimistic that the sovereign debt and banking crisis can be averted.

I use the word 'relatively' when describing the optimism in the spread betting markets because we all know too well that this can be scuppered in an instant and we could eradicate the gains from recent days in no time.

For now though the FTSE seems content around the 5400 level and, as yet, hasn't reversed back down again like we've seen in the past.

If the stock index spread betting market can maintain these highs then it could push to test beyond the resistance, but that's all dependent on the elephant in the room.

Stock Markets: 12 October 2011

The future of the Eurozone hangs in the balance after the expansion plans of the EFSF fall at the final hurdle.

One of the smallest member states has thrown a massive spanner in the works after voting against extending the powers of the main European bailout fund.

It goes to show just how difficult it is for monetary unions to exist in such circumstances, particularly when you're asking one of the poorest nations to stump up cash that might be gobbled up by the richer nations.

But all is not lost. There is another vote in Slovakia, yes, yet another vote and this could mean the measures are passed but this all delays things when speed is of the essence.

Bank after bank is being nationalised and more funds are being withdrawn from the money markets causing liquidity to dry up.

As each day passes another meeting schedule is slipped and we are rapidly moving towards the next crucial G20 meeting at the beginning of November. Further delays will only go further to unsettle the nerves of investors.

There is still another major hurdle that the Eurozone faces, even if Slovakia does pass the vote on the EFSF.

Whatever is agreed from here as the best way to save the collapse of the EU will probably have to go through another round of ratification by all 17 member states. This time round though the votes may be more difficult to pass considering that many have only just scrapped through in the first place.

Well as the biggest story to dominate financial spread betting markets for decades continues to rumble on the FTSE 100 is set to open in the red at 5375 this morning, so not too bad considering.

The 5400/35 area remains the big resistance hurdle for the FTSE 100 which it just can't seem to overcome right at the moment.

Stock Markets: 11 October 2011

Despite banks in European being bailed out and the Eurozone remaining on a knife edge, the FTSE has risen back to the 5400 level in impressively quick time.

However, we seem to be once again at the technical analysis resistance level that has held up so much in the past. A failure to get above here will be the seventh attempt that the index has tried to overcome the resistance so it's little wonder that we've seen some sellers of the FTSE 100 overnight and this morning.

At the time of writing the FTSE is at 5390, having commenced the session a few points lower, so there seems to be a tentative attempt at regaining the 5400 level.

Today's economic data highlights come in the form of UK industrial and manufacturing production.

The industrial element is expected to decline, unsurprisingly given the slow down of things globally and poor domestic demand. On the other hand, there was at least a slightly better than expected rise in the last PMI survey which might lend support.

Manufacturing too might benefit from that PMI data but month on month production is expected to be flat.

Later this evening there's the FOMC minutes which should provide more detail of operation twist, but also whether there's been talk of any other possible stimulus packages.

Stock Markets: 10 October 2011

Again, it was the Franco-German team that everybody is looking to for answers, and they came back pretty defiantly too.

French President Sarkozy has said that by the beginning of November, they will know exactly what needs to be done to tackle the three big Eurozone issues at the moment. Specifically these issues are preventing a Greek default, recapitalising banks, and fixing Europe's economic governance.

Although Sarkozy and German Chancellor Merkel claimed they couldn't give exact details of how they aim to resolve the above, it seems that things are going in the right direction, and they are at least in agreement with each other.

Whilst on the topic of banks, the Belgian/French lender Dexia, who suspended their shares last week, is to split into a 'good' and 'bad' bank.

The Belgian and French governments will take on the responsibility of the 'bad' bank's losses, but it will be supported by state guarantees such as €95bn in bonds and other Eurozone nations' sovereign debt.

Despite the better than expected Non Farm Payroll data released on Friday, the UK blue chip index spread trading market only managed to gain 12 points from the open and ended up closing the session at 5303.

After heavy losses on Monday and Tuesday, investors began to shrug off doubts over the stability of the global economy, and helped the FTSE 100 gain 3.6% on the week. It seems that the spread betting markets took Friday's downgrades on both Spain and Italy's credit ratings with a pinch of salt.

With the US Columbus Day Holiday and no British economic data due for release on Monday, investors will look ahead to Wednesday's British unemployment figures and the US FOMC meeting minutes from September 20-21.

Stock Markets: 07 October 2011

This morning the FTSE is biding its time, hovering around 5300 on the Financial Spreads platform, as it's all about the Non Farm Payroll today.

We all remember how last month saw a big fat 0 hit the screens and subsequently the Dow Jones shed some 400 points or so in the following few days.

Today's number is expected to come in around the 73k mark and if the ADP figure on Wednesday and yesterday's initial jobless claims is anything to go by we could see this and maybe more.

Stock Markets: 06 October 2011

Despite the doom and gloom surrounding the economy, the markets are in recovery mode at the moment and seem to be wishing on a prayer that European leaders are going to find the answer in the coming weeks.

The doom and gloom is so bad that even the UK's biggest retailer is feeling the pinch. Heavy discounting by Tesco in order to get customers has squeezed their margins significantly and more and more shoppers are trading down to value brands.

Food is usually one of the areas where people can stomach, excuse the pun, the odd price rise, but it's unsurprising to see that even this part of people's everyday need is seeing a squeeze.

With prices going up everywhere, the drop in inflation that the Bank of England predicted has so far failed to materialise and so consumers are really feeling it where it hurts.

Yesterday's GDP number, which was revised downwards, showed a shock drop in consumer spending and unfortunately the outlook isn't all that bright either.

Everywhere is slowing down, from Europe to the US and onto China, and it's the lack of confidence that's causing such a drag on growth.

Indices spread betting markets on the other hand are trying to pre-empt a possible recovery by rallying from their lows.

Markets are always forward looking and many investors see plenty of bargain stocks out there. Not only this, but they are possibly looking at the buy of the century if Europe's problems are taken out of the equation.

Noises out of Europe seem to have a greater sense of urgency now. There has been a realisation that a really big deal needs to be done in order to save the banking sector from potential disaster if, although the majority are now saying 'when', there's a sovereign default.

The FTSE is at 5160 at the time of writing. Who'd have thought on Monday or even Tuesday that we'd be back at this level so quickly. The buyers are still there and once again support around 5000 has kept the FTSE afloat.

Stock Markets: 05 October 2011

Financial spread betting markets are in turmoil and there's no doubting that.

Yesterday's volatility shows how investors have little clue as to which way to look. One minute all of Europe's banks are about to crumble, the next they are about to be saved.

What is unbelievable is that only a few months ago Europe's banks were given a clean bill of health following the second round of stress tests, but these crucially didn't take into account the possibility of a sovereign default.

The elephant in the room is starting to get restless as the liquidity within the money markets dries up and we're almost back to square one from a few years ago.

The credibility of the EBA, who undertook the stress tests, has been severely damaged, or what reputation it had left after the tests results came out.

According to them only a handful of banks were in the danger zone. There was also no mention of the mass write downs that are now being talked about that some European banks will have to take in order to stop the rot.

Last night when the Dow Jones was in serious negative mode and had almost dipped into technical bear market territory before buyers went absolutely berserk all because of a simple article in the FT.

US markets rallied over 3% in their final hour of trading which was compounded by a sudden bout of short covering as sellers were caught off guard. The move indicates just how difficult trading conditions are at the moment and how sensitive investors can be to the smallest bit of information.

US investors seemed to welcome the realisation of EU finance minsters that something has to be done to recapitalise Europe's banks, and something has to be done quickly. However, in Europe, the bounce has almost already fizzled out as investors feel "we've heard it all before".

We heard it at every meeting of EU finance ministers in the past and every G something-or-other meeting, yet nothing has been done.

The FTSE initially opened an impressive 100 points in the black before getting dizzy and now at the time of writing we're hovering back around 5000.

There are lots of calls that equities are currently undersold, but until the elephant in the room is removed, no one's going to jump into the icy cold waters.

Stock Markets: 04 October 2011

Looking at the spread betting charts we can the FTSE 100 has been taken back down to the crucial 5000 support level again which it is tentatively hovering above at the moment.

As one would expect, our spread betting account holders have bought into the recent dip. This is in the hope that the index will bounce again, just as it has on the last three occasions it has reached this level in the past couple of months.

At the time of writing though continued weakness from the poor open is setting in and we are below 5000 at 4975. It looks like there are few bulls willing to prop up the markets now but, crucially, investors will be looking to see if the FTSE closes below 5000.

Stock Markets: 03 October 2011

Once again we commence the month of October on the back foot as investors reminisce about previous market crashes that occurred in the same month.

Whilst historically the Autumn month has been a positive one for the UK 100, with twenty out of the last twenty seven years seeing a gain, the 'fall' often seems to play too much of a part in equity markets.

October has seen some of the biggest crashes, in 1987 and 2008 to name just two. Not only does it seem susceptible to a regular pattern of fear, but it tends to be the most volatile month too, with average ranges being double digits in percentage terms.

So as the 'fall' gets underway, although you would've thought we were in the height of summer at the weekend, the markets ramp up into fear mode.

The UK 100 spread betting market is struggling this morning after Greece announced that despite their austerity program, they will fail to meet their deficit targets for both this year and next.

As a result, the troika shouldn't give them the next tranche of the bailout and so Greece should default. However, this still seems unlikely as European politicians don't want to kick them when they are down.

By Simon Denham, 14 October 2011

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