Stock Market Update 16 September 2011

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Financial Spreads: Spread Betting and CFD Trading

Financial Spread Betting on Indices: 16 September 2011

Despite the rogue trading revelation, equity markets held up well yesterday and for UK stocks there was more good news for retailers following Next's bumper figures.

This time it was the turn of Kingfisher, the owner of B&Q, to report stellar numbers and give retailers another lift.

But yesterday's gains were led by banks who rallied on the back of the news that central banks will step in to quell any short fall in dollar lending.

As we've regularly pointed out, banking stocks have suffered severe losses recently but in the past few days have showed small signs of a possible end to their declines. It's still far too early to say the selling is over and today is a critical day for not just the banks, but the equity markets as a whole.

Financial Spread Betting on Indices: 15 September 2011

Financial spread betting investors seem to be pinning their hopes on the fact that there might be some sort of lasting agreement that will once and for all deal with the sovereign debt crisis.

It could well be wishful thinking as we have seen a lot of hot air coming out of the mouths of politicians in the last couple of years, yet the situation worsens by the day.

Meeting after meeting of finance ministers, G-somethings or other leaders just ends up in a load of back slapping and comments about how it will turn out all right in the end.

Well unless something is done soon European leaders will get a shock and be the ones that were steering the ship when one of the EU's member states defaulted.

The markets are now pricing in a 90% chance of a Greek default, so basically they will default unless...

A lot is riding on tomorrow's meeting in Poland which is also being attended by the US Treasury Secretary Timothy Geithner.

Calls from the US and China are becoming more frequent and louder for Europe to sort its problems out, as they, and the rest of the global economy for that matter, have so much riding on the matter.

Until then the indices spread betting markets may continue to just gain a little ground as the hopes build, but if the desired outcome isn't achieved, there could be another almighty move to the downside.

As mentioned already this week a lot of banking stocks formed rather bullish candlesticks which have so far seen their share prices halt their falls.

The fact that two French banks were downgraded yesterday but their share prices actually rallied indicates how much of the bad news has now been priced in. It is still far too early days to call this a floor in the sell off however.

This morning the FTSE 100 is continuing in a similar vein to the way it left off yesterday following a decent bout of buying in US markets last night.

At the time of writing, the FTSE 100 is at 5285 so bulls must be thinking the near term resistance around 5325 is a possible target. In fact the quote on the Financial Spreads platform actually hit this level towards the end of the Dow Jones's session last night.

Economic data today comes in the form of UK retail sales this morning. This is expected to fall following a tough August for shoppers after much of the discounting of the earlier summer months came to an end.

Then later on from the US there's the Phili Fed which caused some fireworks last time it was released after plummeting last month. This time a bounce is expected from the -31 shocker to around -16.

Financial Spread Betting on Indices: 14 September 2011

At the time of writing the FTSE 100 is doing very well to improve on what started as a poor start to the day's trading.

We had called the stock market index lower by some 40 to 50 points, which is where we started out, but it hasn't taken long to reverse those losses. We're now back above the 5200 level in positive territory and looking in relatively good shape.

Spreads investors are holding onto a glimmer of hope that the call between Merkozy and the Greek Prime Minister, George Papandreou, will, as a minimum, confirm their next tranche of bailout funds. Many are also hoping it will be the first step towards the desired action needed to halt the crisis ahead of Friday's key G7 meeting in Poland.

Today's major economic data releases come in the form of US retail sales which are expected to rise a little by 0.2%.

The last Beige Book was relatively encouraging from a consumer spending point of view through August, despite what was going on in the financial markets. This might be a ray of light in the darkness.

Financial Spread Betting on Indices: 13 September 2011

China comes to the rescue of Italy as they show their support for Europe's third biggest economy.

You have to wonder how long it'll be before other European states go cap in hand to the Chinese.

In fact, China has already been purchasing large amounts of euros and European sovereign debt so what we are seeing isn't anything particularly new or ground breaking. What it does do is remind us of our reliance on the world's fastest growing economy.

As a result, the response from Asian markets was rather muted and European indices have opened quite a bit lower than our original calls. The FTSE 100 is in the mid 5100 region when we were expecting an open of plus 5200.

Italian bonds have hardly battered an eyelid following the news, with yields pretty much where they left off from yesterday. As a result, everything about today's little move higher for the stock market indices has a bit of a short squeeze feel about it.

Encouragingly though the FTSE 100 has bounced off the 5050 area once again and this remains the crucial support level for the index.

European indices, in particular the French CAC 40 which got seriously bashed around yesterday, are making tentative gains but as things stand this morning it's hardly a move that screams 'the sell off is over'.

Having said that, our spread betting account holders seem to feel that more gains can be made and the FTSE 100 could get back above 5200 to test 5300 and possibly beyond.

They bought into the index yesterday and those longs on the whole remain in place. If past behaviour is anything to go by though I can foresee that if we do test 5400 again those same clients will close their longs and go short.

The worrying thing for investors of the FTSE 100 is that whilst its European counterparts have broken to new lows for the year, the FTSE 100 has not. It may turn out to be a matter of time before the London market gives up its support and tests the 4800 area again.

Investors seem to be on a knife edge with the battle between bulls and bears finely balanced and at some point one group will gain the upper hand.

Financial Spread Betting on Indices: 12 September 2011

Traders have started the week with a sea of red as European indices are falling, particularly the French stock market which is being absolutely battered.

The French CAC 40 is now below the lows of August and so the index is only 15% or so from the lows of March 2009 following the last banking crisis. As a comparison the FTSE 100 is still over 30% off those lows.

Having said that, the banking sector sell off this morning has brought the FTSE down to 5100 at the time of writing, just above its recent lows.

Key near term support is at 5050, which looks dangerously like being tested, meanwhile to the upside resistance is rather further away, expected at 5200/85 and 5325.

Financial Spread Betting on Indices: 9 September 2011

The indices spread betting markets have taken things in their stride throughout this week and have put in some decent gains.

We were slightly expecting more volatility in last night's action, which was dominated by Obama's speech to Congress, however the reaction from the Dow Jones was somewhat muted.

But as usual it was Bernanke who market participants were more focused on. His speech can be summed up in just a few words: not good enough.

Investors were hoping for more hints that stimulus is coming but they didn't get it so that's feeding through to European stock markets this morning.

The FTSE is just about at breakeven this morning after having been called to open below the 5300 mark, so there are more buyers out there than expected.

At the time of writing the FTSE 100 is at 5340 with the major resistance level at 5400 remaining the big hurdle for the bulls.

As long as the near term support of 5300-5280 can hold then we might even see a test of near term resistance at 5375 before a test of the all important 5400/25 area.

Financial Spread Betting on Indices: 8 September 2011

Optimism seems to be sweeping the markets as the Dow Jones put in a very impressive rally overnight.

The Fed's Beige Book didn't exactly shine, but the buying spree was fuelled by the prospect of a growth package from President Obama when he addresses Congress later today. We are also looking for Bernanke to give his views on the US's economic outlook later today.

The bet that the bulls are having at the moment is that Bernanke will give further indication of a fresh bout of stimulus for the world's biggest economy.

The FTSE 100 had been called higher overnight, but the closer the CFDs quote got towards 5400 the more it looked like it was running out of steam. As a result, once again this area, although we didn't touch it, is looking to be a bridge too far for the index.

The FTSE 100 is now down on the day at the time of writing to 5300 so near term support isn't seen until about 5180 and 5080. This indicates that it could be just as easy for us to head back down to this area as it has been for us to bounce in the last couple of days. In fact this is just how the market has been trading in recent weeks.

Financial Spread Betting on Indices: 7 September 2011

Many investors may be rather bamboozled by the move yesterday and this morning in the face of such chaos in Europe.

Despite all the doom and gloom the UK 100 is looking in relatively good shape. The indices spread betting markets have been trading in ranges that suggest that they might be finding a platform of support. For the FTSE 100, yesterday's bounce off the 5050 area coincided with a similar bounce from the same area last week.

In the face of all that's being thrown at the market, yesterday's move was encouraging, but largely assisted by the good bounce from its lows by the Dow Jones.

The 5400 area remains the crucial resistance area that the UK 100 needs to get back above before we can start to be more confident that the recent sell off is over. Whilst this is only 150 points away, it seems like a mighty task to many.

This morning we're at 5250 at the time of writing so this upside target and the major support level at 4800 seem to be restricting the index to another trading range. However, spread betting account holders should be cautious as the range is quite a wide one so volatility isn't expected to get any lower.

Economic data releases today come in the form of industrial production from the UK and Germany and then we end the day with the US Fed's Beige Book.

Financial Spread Betting on Indices: 6 September 2011

The FTSE 100 has opened much higher than we expected this morning.

I have to admit myself, however, that a call of 60 points lower in the early hours of the morning, just on the back of the moves in Asian markets, did seem a little far fetched.

The index has shrugged off the negative mood in Asia and started a little perkier this morning up some 20 points. This little bounce could conceivably carry on when US investors return to their desks from their extended weekend to see that Europe has driven their Wall Street futures down over 200 points and the S&P 500 over 25 points.

Sometimes US shares traders get back to their desks in such a situation and go 'hey, why the market so much lower' and give us a bit of an uplift.

However, the overall picture remains bleak with yesterday's trading session riddled with bad news from the services sector and a resurgence in Eurozone debt crisis woes.

When you've got the head of one of Europe's biggest banks saying that the situation now is more worrying than the 2008 crisis, then you've got to be concerned. Back then banks were bailed out by governments, but now it's the governments that are in trouble and there isn't anyone who can bail them out.

As mentioned the services data across Europe was poor in particular for the UK, which doesn't bode well for this quarter's GDP number.

The PMI numbers are often intrinsically linked to business and consumer confidence which as we all know has been tumbling recently. If a business or consumer is worried about the months ahead then they will not look to invest, expand or spend and so this is why we've seen service activity dip along with confidence.

This afternoon the US releases its Services Data whish is due to come in just above the crucial 50 level at 51.3. However, because last week's consumer confidence came in so poorly, this ISM non-manufacturing number could possibly disappoint to the downside and come in below 50.

Financial Spread Betting on Indices: 5 September 2011

The announcement by the US of a $200bn lawsuit against the banking sector for the miss-selling of mortgage backed assets is hurting the banks this morning.

This has lead to a weak stock market so the FTSE 100 has dipped below the 5200 level. At the moment it seems impossible to be bullish of stocks when the markets keep getting bombarded by bad news.

By Simon Denham, 16 September 2011

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