Please find below the Financial Fixed Odds report from David Evans, market analyst at BetOnMarkets.

The markets are firmly on the back foot today as the reversal gathers momentum.

Dark clouds are gathering over the green shoots.

A slew of poor economic data has caused investors to take money off the table with the selling pressure building momentum.

US housing foreclosure activity increased by more than 32% year-on-year in April. Undoubtedly linked with this, US retail sales dropped by 0.4% month-on-month and 11% year-on-year. Markets were also spooked by comments from David Walker suggesting that the US could be in danger of losing its precious AAA debt rating.

The dark news flow is not restricted to the US with UK PPI recording its smallest increase since the 1960s and the BoE inflation report suggesting that the UK recovery will be slower than previously expected. The cautious report sent the pound tumbling against most world currencies.

Along with continuing fallout from the US bank stress tests, all this has caused investors to rotate into more defensive sectors with the banking sector experiencing the brunt of the selling pressure. Lloyds Group is down around 30% from its recent peak and Barclays, after breaching the £3.00, is down around 20%

Despite the change of tone, markets have more room to manoeuvre thanks to the startling rally from the lows of March. A quick slump back towards the recent lows could catch many unaware after weeks of steady gains.

FTSE Fixed Odds Trade

A One Touch Trade predicting that the FTSE 100 will revisit the March lows of 3440 in the next 90 days could return 276%.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

Please find below the Financial Fixed Odds report from David Evans, market analyst at BetOnMarkets.

Markets are weaker again today as investors take more time to make sense of the rally from the lows of March.

Summing up the current mood, ECB president Trichet recent stated that growth in around the ‘inflection point’ in the economic cycle. The OECD put out a more positive message by starting that Britain, France and Italy were showing tentative signs of the recession slowing.

This cagey language is a step down from the ‘green shoots’ talk that was spreading last week and market momentum seems to have dropped a gear accordingly.

Oil has been rising in tandem with global economic confidence, but it appears to have overshot a little, hitting $60 at one stage today while equity markets flounder. Inflation concerns are starting to grow again as oil continues to strengthen, especially with oil having such a big impact on the US trade deficit.

Banking shares are amongst the biggest fallers today as traders continue to question the results of the US stress test. Defensive stocks seem to be back in favour as risk appetite diminishes somewhat. Barclays is one of the biggest fallers today while Tesco, United Utilities and AstraZeneca are performing strongly.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

Please find below the Financial Fixed Odds report from David Evans, market analyst at BetOnMarkets.

With the bank stress test results out of the way and the US recession seeming to decelerate, markets were on a high last week.

However, today we have a light economic calendar, leaving traders with few potential catalysts to launch markets higher once more. The complexities and small print of the US banking stress test meant that traders were going to need a few days to get to grips with its implications.

This appears to be the case today as the weekend news flow has turned negative with many commentators questioning just how stressful the tests actually were. Indeed, US unemployment is already very close to the ‘adverse’ scenario explored in the test.

One can understand the delicacy of the stress test operation. Adverse results could result in further aggressive selling in financials, while making the tests too easy could just store up trouble for the future. Treasury Secretary Geithner appears to have seen the stress tests as a confidence test and judging by last week’s reaction, it seems to have worked.

Confidence is a valuable commodity in the current crisis with a sudden withdrawal of confidence potentially leading to depositors rushing to withdraw their funds. However, playing the confidence card leaves very little margin for error. If bank earnings on both sides of the Atlantic fall more than expected and write downs increase more than forecast, the show may grind to a halt once more.

Various US financials such as Capital One and US Bancorp have fallen today on the announcement that they are planning to raise more capital through issuing more shares.

HSBC’s results were roughly in line with expectations, but the bank is being punished on the disclosure that much of its profits came through a decline in the value of its own debt. The bank had effectively bet against itself and won.

USD/ CAD Fixed Odds

Commodities have come off the boil today after rallying well in recent weeks. The Canadian economy is more sensitive than most to weakness in oil prices, which may put pressure on the CAD in coming weeks.

A Fixed Odds No Touch trade predicting that the USD/ CAD won’t touch 1.1400 in the next 21 days could return 121%

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

Please find below the Financial Fixed Odds report from David Evans, market analyst at BetOnMarkets.

As another week draws to a close, it looks as though the world economy has passed two major hurdles in the last 24 hours.

Last night the release of the US government banking stress test went without a major hitch and today US Non Farm payrolls came in at slightly better than expected. Traders were also impressed with the results from RBS, lifting the shares up over 10% on the day.

“Levelling off”, “flattening” and “decelerating” are the buzz words relating to the recession coming from Obama’s economic team. Despite the untold comparisons to the great depression over the last few months, it does appear increasingly likely that this crisis won’t plumb those depths. This, more than anything, has given traders hope. There were times when it looked as though the bottom might fall out of the global financial system, but now this seems an extreme prognosis.

LIBOR spreads have been tightening recently and credit default swaps on major US companies are now at their lowest level since October of last year. Not everyone is convinced we’re out of the woods yet though. Even RBS chief executive Stephen Hester has dismissed the talk of green shoots, stating that the next two years will still be extremely difficult.

FTSE 100 Fixed-Odds Trade

A No Touch trade predicting that the FTSE 100 won’t touch 5000 at any time during the next 60 days could return 32%.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

The Bank of England and European Central Bank interest-rate decisions were among the main highlights at home and in the eurozone this afternoon, while US stock markets retreated on the back of weakening technology shares today.

The BoE has decided to keep interest rates unchanged at 0.5%, as anticipated, but surprised the markets by announcing the purchase of an additional £50 billion worth of assets, upping the size of its quantitative easing programme to £125 billion. The BoE had not been expected to make this announcement until at least next Wednesday, when it publishes its quarterly inflation report and economic forecasts.

The Central Bank expects to complete the programme in another three months and will keep the scale of the programme under review. However, the big question is: why would the central bank ‘prematurely’ announce the asset purchase extension?

Earlier this week, the National Institute of Economic and Social Research (NIESR) forecast that the UK economy could contract by 4.3% this year, far worse than the European Commission’s (EC) predictions of a 3.8% contraction and the UK government’s expectation of a 3.5% drop this year. Could it be that the BoE is implementing additional quantitative easing because its forecasts for economic growth were too optimistic?

‘We are a little taken aback by the decision to increase the quantitative easing target by 50 billion pounds. We had thought it more likely that the Monetary Policy Committee would sit and wait to assess the impact of the existing programme rather than expand it right away,’ said Philip Shaw, economist at Investec. ‘Clearly, committee members have been spooked by some poor backward-looking domestic and international economic data. But the statement also points out that forward looking numbers are showing promising signs.’ [1]

Further details of today’s decision will be made available in the minutes, scheduled for release at 9.30am on Wednesday, 20 May.

Elsewhere, the European Central Bank, in its monetary policy meeting, opted to cut interest rates by 25 basis points to a new record low of 1%. The bank has emulated the UK and US by adopting a quantitative easing policy in order to stimulate growth in the ailing region.

In a press conference, ECB President Jean-Claude Trichet said that policy members unanimously agreed on a plan to purchase €60 billion bonds and the ECB will offer banks longer-term loans: ‘The governing council has decided, in principle, that the eurosystem will purchase euro-denominated bonds issued in the euro area,’ Mr Trichet said today. [2]

At home, stock markets remained broadly unchanged following the interest-rate meeting, with investors continuing to focus on the US government’s stress test results, scheduled for release later today. Sentiment turned quickly towards the late afternoon session, however, with the FTSE 100 paring most of today’s gains – up only 11.74 points (+0.30%) to 4408.23. In the meantime, the Dow Jones Industrial Average and S&P 500 were down by more than 0.7% to 8437.57 and 913.23 respectively.

US markets were weighed down by technology and telecom companies, which fell after JP Morgan cut its rating on AT&T and Verizon from ‘neutral’ to ‘overweight’. [3] AT&T shares plunged 4.6% to $25.47 while Verizon fell 4.2% to $29.48.

Meanwhile, certain US banks continued to hold on to their values despite the fresh bout of negativity, with Citigroup up by 4.4% to $4.03. Bank of America advanced 13% to $14.36, Bank of New York Mellon gained 1.3% to $30.86, but Wells Fargo and US Bancorp fell more than 3.5% to $25.74 and $20.53 respectively. Investors should also be aware of the Federal Reserve’s stress test results, scheduled for release later today.

In economic news, jobless claims data didn’t bode well for sentiment either: Although the Labor Department said that the number of American’s claiming first-time unemployment benefits (initial jobless claims) fell by 34,000 to 601,000 last week, the total number of Americans claiming unemployment benefits for more than one week (continuing jobless claims) surged by another 56,000 to 6.351 million – the highest since the government started keeping track in 1967.

On an encouraging note, however, non-farm productivity, a gauge of business health, appeared to defy the recession, rising by an annualised rate of 0.8% in the first quarter following a 0.4% plunge the quarter before. The latest figure was more than double the 0.3% rise expected by economists in a Dow Jones Newswires survey and the improvement was attributed to greater efficiency gains derived from cost cutting exercises.

[1] Source: Bloomberg News (May 6 2009)
[2] Source: Wall Street Journal website (May 6 2009)
[3] Source: Bloomberg News (May 6 2009)

By Anthony Grech, Research Analyst, IG Index.

Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

Wall Street opened firmly in positive territory this afternoon, with the Dow notching up over 86 points within minutes after the opening bell, following the release of positive unemployment data in the US today. Optimism was rife in the UK too, with the FTSE 100 garnering 94.98 points (2.19%) to 4431.92 and the FTSE 250 rising 77.11 points (0.98%) to 7913.94 by 2.45pm (London time).

Two unrelated labour market surveys – the Challenger Job-Cut Report and ADP Employment Survey – released in the US today threw up positive results: the Challenger job-cut report, released by Chicago-based Challenger, Gray & Christmas, has shown that job-cut announcements in the US fell to 132,590 last month – the lowest level in almost five months.

The ADP Employer Services gauge, another report measuring unemployment in the private sector in the US, also revealed a smaller-than-expected level of job losses last month. The report shows companies in the US cut an estimated 491,000 workers in April as compared to 708,000 job losses recorded in March. A median estimate of 28 economists surveyed by Bloomberg had predicted the ADP report would show a decline of 645,000 jobs.

‘Job cuts are still at recession levels, but the fact that they are falling is certainly promising and may suggest that employers are starting to feel a little more confident about future business conditions,’ John Challenger, chief executive officer of Challenger, Gray & Christmas said in a statement following the report. [1]

Not surprisingly, Wall Street rallied this afternoon, with the Dow up 86.10 points (0.98%) to 8496.75 and S&P 500 rising 8.97 points (0.99%) to 903.80 at 2.45pm (London time). Technology stocks Microsoft, Intel and IBM were the biggest gainers on the Dow today, rising between 0.52% and 1.21% at $20.03, $16.27 and $105.85 this afternoon. Pfizer, up 1.13% at $14.28 and Boeing, up 0.98% at $43.15, were the other top performers this afternoon.

At home, the FTSE 100 was up 94.98 points (2.19%) at 4431.92, while the FTSE 250 was 77.11 points (0.98%) higher at 7913.94. On the FTSE 100, Standard Chartered was the day’s biggest gainer, rising 9.39% to 1258p after the bank said that its first-quarter profits and income had been ‘its best ever’. ‘Despite the challenging macro-economic environment and continuing difficulties in the financial markets, the group remains in very good shape and we are selectively growing the business,’ Standard Chartered said today. [2]

Other top stocks on the FTSE 100 included Hammerson, up 7.08% at 336.5p; Intertek, up 6.85% at 1139p; Legal & General, up 6.5% at 63.90p and Sage Group, which was 6.26% higher at 196.9p.

Miners, on the flip side, surrendered earlier gains, with Antofagasta and Drax Group down 5.5% and 5.48% at 609.5p and 487.25p respectively. Cobham, down 4.21% at 170.50p; Man Group, down 3.48% at 249.25p; and Bunzl, down 3.39% at 527.50p were other poor performers on the FTSE 100.

UK economic data released today was also positive: a report on the services industry, released by the Chartered Institute of Purchasing and Supply (CIPS), has shown that the UK gauge of services industries (from banks to computing) rose to 48.7 in April – the most since 1999 –from 45.5 in March. A median of 30 analysts surveyed by Bloomberg had forecast a figure of 46.3.

‘There is a fairly consistent pattern of survey evidence improving, and we expect the economy will show some positive growth in the second half,’ said Philip Shaw, an economist at Investec Securities. [3]

[1] Source: Bloomberg News (May 6 2009)
[2] Source: Wall Street Journal website (May 6 2009)
[3] Source: Bloomberg News (May 6 2009)

By Anthony Grech, Research Analyst, IG Index.

Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

US equity markets traded marginally lower this afternoon as risk appetite was quenched on the back of yesterday’s rally. Certain financial companies continued to trade higher, however, despite stress test rumours and cautious remarks from Standard & Poor’s and Federal Reserve Chairman Ben Bernanke.

It is rumoured that the government’s stress test results, now scheduled for release on Thursday, will reveal that 10 out of the 19 diagnosed banks will require additional capital – a rumour which would have caused havoc a few months ago.

But these allegations were mainly shrugged off in the financial sector today as most US banks continued their ascent – Citigroup was up by 6.25% to $3.40 and Bank of America was 3.3% higher at $10.72 a share during the first half hour of trading. Goldman Sachs, meanwhile, advanced 1% to $135.5 but Wells Fargo and JPMorgan Chase fell by 2.9% to $23.55 and 1.9% to $35.12 respectively.

Sentiment in the sector may have been tainted by a warning that Standard & Poor’s has placed its ratings on 22 national and regional banks on watch for a downgrade, with banks facing a possible downgrade within 90 days. [1]

Elsewhere, Federal Reserve Chairman Ben Bernanke today said the economic contraction may be slowing down and the housing market has ’shown some signs of bottoming’ out. Mr Bernanke, however, warned that unemployment is likely to continue rising in the months ahead and that another shock to the financial system would undercut the Central Bank’s economic forecasts. ‘A relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall,’ Mr Bernanke said today in testimony to the Congressional Joint Economic Committee. [2]

In his testimony, Mr Bernanke also revealed that, going forward, the Central Bank would be more transparent and the Fed will soon publish (on its website) more information about its lending programmes.

Back on Wall Street, life insurers were sharply higher at the start of trading today, with Principal Financial Group up by as much as 12% to $18.96 despite reporting a first-quarter net income that missed analyst expectations. The insurer last night reported a net income of $112.8 million, down 35% from the $174.2 million registered during the first quarter of last year.

Prudential Financial advanced 1.3% to $31.19 and American International Group (AIG) rose 13% to $1.65 a share.

Elsewhere, Kraft Foods, the word’s second-largest food maker, reported a 10% gain in first-quarter profits due to rising food prices and aggressive cost cutting; Kraft’s first-quarter net income climbed to $660 million, or 45 cents a share, on revenues that were 6.5% lower at $9.4 billion. According to the company, sales were primarily hurt by a strengthening US dollar. Kraft’s shares jumped 6% to $25.73 a share, however, after earnings per share beat Bloomberg’s median estimates by five cents.

In economic data, US macroeconomic figures are continuing to show signs of improvement. The Institute for Supply Management’s (ISM) non-manufacturing index for April today came in at 43.7 as compared to last month’s reading of 40.8. Although better than March, the figures are still below 50, indicating that the services sector is contracting, but at least at a slower pace.

By 3.30pm (London time) the Dow Jones Industrial Average was 19.67 points (-0.23%) below its previous close at 8407.07 while the broader S&P 500 had declined 5.75 points (-0.63%) to 901.49. The Nasdaq was also lower, down 12.52 points (-0.88%) to 1415.44.

[1] Source: Wall Street Journal (5 May 2009)
[2] Source: Bloomberg News (5 May 2009)

By Anthony Grech, Research Analyst, IG Index.

Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.

Please find below the Financial Fixed Odds report from David Evans, market analyst at BetOnMarkets.

Markets are idle today with most of Europe enjoying a bank holiday and UK traders eyeing the clock ahead of their long weekend.

Equities are drifting slightly lower, but so far today’s trading range on the FTSE Spread Betting is the smallest since June 2008.

US markets are also experiencing a quiet day, which in the grand scheme of things can only be a good thing.

Historically markets tend to bottom when volatility subsides.

The VIX options volatility index continues to drop and credit markets indicate a renewed appetite for risk taking. It appears that traders may finally think they have a grip on things. The world economy may continue to plummet, but at a more predictable rate.

Whether markets are too complacent and in for a rude awakening or not is another question.

The biggest market mover today is the announcement that the stress test results for US banks will be delayed further as various parties sweat the details.

Crude Oil is enjoying a strong day as are financials once again amongst the leaders. Barclays has taken its foot off the gas, but that is to be expected after the spectacular double digit gains over the last few days.

This website content does not constitute investment advice. No individual contributor, contributing company nor Online-Spread-Betting.com accept any responsibility for any use that may be made of the content.