The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning, inflation is the key theme with the Bank of England releasing the latest CPI (3.5% expected) and RPI levels (4.8% expected) at 09.30.

When inflation exceeds 3%, the governor of the bank of England is obliged to write a letter explaining the situation to the chancellor.

This can be a dry affair, but Mervyn King could use the opportunity to make some heavy points so there could be some action as the inflation numbers are released and the letter hits the newswires.

The Pound/Dollar is the one to watch for this. The pound has been dropping on speculation that Osbourne will able to get his cuts through.

Ironically it was the fear of the spending cuts not happening that was harming the pound previously. Now traders are speculating that the spending cuts will leave room for UK interest rates to stay lower for some time, which in turn hurts the pound in the medium term. Although the theory is that this should be good for Sterling in the long term.

In addition today, we have European inflation numbers at 10.00, following by US building permits and PPI at 13.30 PM.

Earlier today the Royal Bank of Australia released the minutes of its last meeting where they stated that rates were ‘well placed’. The statement has hit the Australian Dollar/US Dollar Spreads on speculation that another round of rate hikes won’t be seen for some time.

Aussie Dollar Drops as Commodities Prices Fall

Talking of the Aussie Dollar…it is interesting to note that the Australian dollar has accelerated its slide as commodities prices have dropped.

With all the talk of austerity measures across Europe, demand for raw commodities may be down on previous years, hurting a core part of the Australian economy.

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

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning, investors are being thrown plenty of reasons to be fearful and markets are reacting accordingly.

The perceived safe haven of the Japanese yen is in big demand with the US dollar not far behind.

Fears of another liquidity crisis in the short term interbank lending market LIBOR are increasing. Banks and investors don’t know who has what liability to what in terms of Greece and other PIIGS countries (sound familiar?).

It’s rumoured that a bailout for Greece was in fact a defacto bailout for European banks that are holding dangerous levels of debt.

In other words, just as banks looked as though they had got through the mortgage related credit crunch, the sovereign crunch comes looming.

The Euro/Dollar has plunged to its lowest levels since 2006.

However it is the Pound that is the weakest performer this morning after weekend house price figures showed a drop in house price inflation. It is now feared that new chancellor George Osbourne may have less room to manoeuvre than first anticipated.

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

If you decide to spread bet on a commodity such as US Crude Oil then, looking at a spread trading website like FinancialSpreads.com, you might see the crude oil spread of $72.85 – $72.90.

Therefore, you can spread bet on US Crude Oil to move

• Higher than $72.90
• Lower than $72.85.

When spread trading, you bet on every unit the market rises or falls; specifically, for the US Crude Oil market a unit is $0.01 of the commodity’s price movement.

In this case, you could decide to bet £2 for every $0.01 US Crude Oil moves up or down.

Buying – Spread Betting on the Market to Rise

If you bought US Crude Oil at $72.90 and the commodity went up then the spread might become $73.56 – $73.61. If that happened, you might choose to close your spread bet for a profit at $73.56.

Your Profits (or Losses) = (settlement value of the market – opening value of the market) x stake per $0.01
Your Profits (or Losses) = ($73.56 – $72.90) x £2 per $0.01 stake
Your Profits (or Losses) = $0.66 x £2 per $0.01
Your Profits (or Losses) = £132 profit

The markets can of course fall, if the market had moved down to, as an example, $72.21 – $72.26, you could choose to close your spread bet to prevent further losses. Assuming this was the case, you would sell your trade at $72.21.

You would close your bet with the same £2 per $0.01 stake:

Your Profits (or Losses) = (settlement value of the market – opening value of the market) x stake per $0.01
Your Profits (or Losses) = ($72.21 – $72.90) x £2 per $0.01 stake
Your Profits (or Losses) = -$0.69 x £2 per $0.01
Your Profits (or Losses) = -£138 loss

 

Selling – Spread Betting on the Market to Fall

A key advantage of placing a spread bet is that investors can sell the markets.

If you recall, initially the spread betting price was $72.85 – $72.90.

If you were to go short of US Crude Oil at $72.85 and the commodity decreased then the market might be re-priced at $72.21 – $72.26. If this were the case, you might choose to close your bet for a profit by buying at $72.26.

Your Profits (or Losses) = (opening value of the market – settlement value of the market) x stake per $0.01
Your Profits (or Losses) = ($72.85 – $72.26) x £2 per $0.01 stake
Your Profits (or Losses) = $0.59 x £2 per $0.01
Your Profits (or Losses) = £118 profit

However, if the market had moved up to, as an example, $73.42 – $73.47, you could choose to close your bet to limit your losses. If so, you would buy back at $73.47.

With the same £2 per $0.01 stake:

Your Profits (or Losses) = (opening value of the market – settlement value of the market) x stake per $0.01
Your Profits (or Losses) = ($72.85 – $73.47) x £2 per $0.01 stake
Your Profits (or Losses) = -$0.62 x £2 per $0.01
Your Profits (or Losses) = -£124 loss

US Crude Oil (March) prices taken as of 14-May-10.

More on Crude Oil Spread Betting

1) Where can I Spread Bet on the Crude Oil Market?
2) Where can I find Real-time Spread Betting Prices for the Crude Oil Market?
3) Where can I find Live Charts / Candlestick Charts for the Crude Oil Market?
4) How do you Spread Bet on the Crude Oil Market to Go Up?
5) How do you Spread Bet on commodities markets like Crude Oil to Go Down?
6) Where can I find more on trading commodities markets?

Risk Warning: 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.

The market wrap from Michael Hewson, Analyst, CMC Markets.

Austerity measures seem to be all the rage at the moment with Portugal, following its neighbour Spain in announcing fresh tax rises in response to the country’s worsening fiscal plight.

This fiscal tightening across a large part of the Euro zone which includes Portugal, Ireland, Greece and Spain, while necessary given the financial strait-jacket these countries are in, could well be a shape of things to come in the UK.

As if to highlight the seriousness of the problems faced we have the new UK coalition government taking 5% ministerial pay cuts as a prelude to their own plans to cut the size of the UK deficit.

Yesterday’s worse than expected UK trade balance highlighted the scale of the problems as UK exports were unable to make the gains analysts were expecting as a result of the weaker pound, largely because of the problems in Europe, which is one of the UK’s biggest export markets.

This continued belt tightening in Europe will do nothing to assuage worries about how the UK increases its own exports and continues its climb out of recession.

The pound slid back on the currency markets on the back of these figures and continues to exhibit broad weakness against a basket of currencies.

The Euro continued its slide on the currency markets after the ECB intervened in the bond market buying up Spanish and Italian bonds as it indulges in its own form of quantitative easing.

All the while Gold continues to surge to new highs as investors look for safe havens on the back of the devaluation of fiat currencies.

EURUSD – despite making marginal new 14 month lows overnight at 1.2517 the Euro has so far managed to hold above the 1.2510/20 support area. This continues to remain a short term obstacle to further losses and a test initially of the 1.2460 lows of March last year.

The overall downward momentum continues to remain in place with the upper trend line boundary currently around the 1.3520/30 area. There is also resistance just below the April lows at 1.3115/20. While the Euro continues to trade in this broad downward trend the target of 1.2135 over the next few weeks continues to be the primary objective. The 1.2135 level is a key Fibonacci support level in that it represents a 50% retracement of the up move from the all time Euro lows at 0.8230 set in the October 2000 to the highs of 2008 at 1.6040.

GBPUSD – Sterling has had a pretty lousy past two days, adding to its losses overnight after UK trade figures came in much worse then expected at -£7.5bn for March, caused by a jump in imports to their highest levels since August 2008.

The break of 1.4780 on a daily close now opens the way to a test of last week’s lows at 1.4475.

A break below these lows opens up a test towards the April 2009 lows at 1.4270. Resistance now lies around the 1.4780 previous support, and the pound needs to recover above this level by the end of the week otherwise a test of 1.4000 looks pretty much a certainty.

EURGBP – the Euro continues to regain ground against the pound, pulling away from its lows of the week around 0.8440 on the back of the poor UK data. This will in all probability only be a temporary respite for the Euro, though we could see a test of the main resistance around the 0.8730 area. The odds still favour a test of the key support around the 2009, and last week’s lows at 0.8400, and a break lower towards 0.8250.

USDJPY – The dollar yen remains in risk on/risk off mode as it trades within a broad range between 92.15/20 and the recent highs near 93.50/60 area. We would need to see a break above the 93.50/60 area to re-target the April highs around 95.00, while a break below 92.15/20 re-targets 91.20.

Spread betting, FX and CFDs are leveraged products. They carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved. Seek independent advice if necessary. Note that CMC Markets provide an execution-only service. CMC Markets research and charting tools are indicative and provided for information purposes and must not be relied upon as investment advice.

The above content does not constitute investment advice. Neither CMC Markets nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the above.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority, registration no. 173730.

The market wrap from Michael Hewson, Analyst, CMC Markets.

UK markets have continued their progress higher after yesterday gains, with British Telecom leading the way after it returned to profit today with figures of £1bn. However sentiment remains fairly fragile with concerns about sovereign risk never far away from the markets gaze.

This can be seen from the surging Gold price which has hit all time highs against the US dollar, Euro and the pound. The decision by the Spanish public sector union to call a strike over the austerity measures implemented by the Spanish government yesterday highlights the pot holes in the road ahead for fiscal re-alignment measures across the Euro zone.

Banking stocks are still mixed over fears surrounding potential government plans to regulate, or split up the investment banking operations, and retail operations of the main UK lenders.

Another concern is just how the new coalition government intends to get the UK’s debt levels down, with a VAT rise to 20% a likely measure according to a group of economists questioned by the BBC.

Justin King, chief executive of supermarket Sainsbury’s, warned the new government that if it is planning such a move it should give the retail industry plenty of notice.

The supermarket giant posted a rise in sales and profits in the year to March 20 and said it was confident of further progress despite expectations of a challenging consumer spending environment. Underlying pre-tax profit of £610m was slightly ahead of expectations and up from £519m a year ago. Sales rose to £21.4bn from £20.4bn and grew 4.3% on a like-for-like basis excluding fuel.

Eurasian Natural Resources is satisfied with its progress during the first quarter and say the recovery in demand, especially in China, continue to give it confidence for 2010. Rio Tinto and Kazakhmys are also higher in a generally rising mining sector.

US markets initially opened a little lower after slightly disappointing weekly jobless figures and earnings forecasts weighed on sentiment. Cisco Systems sales for the current period came in at the lower end of expectations and prompted some profit-taking.

The Pound has had a pretty lousy day, adding to its losses yesterday after UK trade figures came in much worse then expected at -£7.5bn for March, caused by a jump in imports to their highest levels since August 2008.

These figures would suggest that the effects of a weaker pound are still not having the desired effect with respect to export growth, even though export growth is rising, just not as fast as hoped, though that may have a lot to do with the problems in Europe.

Spread betting, FX and CFDs are leveraged products. They carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved. Seek independent advice if necessary. Note that CMC Markets provide an execution-only service. CMC Markets research and charting tools are indicative and provided for information purposes and must not be relied upon as investment advice.

The above content does not constitute investment advice. Neither CMC Markets nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the above.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority, registration no. 173730.

The market wrap from Michael Hewson, Analyst, CMC Markets.

Stock markets and commodities have been sending mixed messages over the past 24 hours. We have seen some recovery in equities on the back of attempts by Spain to implement further drastic austerity measures in response to Monday’s EU bailout, and the formation of a new coalition government in the UK.

Despite these rises in equity markets, which would seem to suggest some return in risk appetite, investors remain concerned, hence the continued allure of Gold which continues to surge higher, making new all time highs against the US dollar, Euro and Sterling as investors flock to the safety of this long standing store of value, and safe haven.

Gold’s gains have also been driven by the decision of the EU to force the European Central Bank to implement bond purchases to drive down the risk premium on sovereign debt risk, which has acted as a form of quantitative easing, pushing yields down. It has also reinforced concerns about the further devaluation of fiat currencies, especially as the Bank of England didn’t rule out further quantitative easing in its inflation report yesterday.

Bank of England governor Mervyn King also delivered a sobering assessment of the problems facing the UK economy in this report especially over the next few months. He also indicated that interest rates were likely to remain low for the foreseeable future and this has led the pound to slide back. He did back the plans of the new UK coalition to take steps to start making cuts to the budget deficit now.

Today’s UK trade balance figures will be scrutinised carefully on the back of recent sterling weakness, for evidence that the weaker pound is having a positive effect with respect to exports.

In the US the market will be looking for further improvement in this week’s weekly jobless claims.

Forex Markets

EURUSD – now that the ripples of Monday’s bail-out are starting recede the Euro seems to settling down just above the lows of last week of $1.2520. This remains the key obstacle to further losses in the short term, as it seeks to work out some of the oversold momentum of the last few days.

The overall downward momentum remains in place with the upper boundary currently sits around the $1.3530 area.

There is also resistance just below the April lows at 1.3115/20. While the Euro continues to trade in this broad downward trend the target of 1.2135 over the next few weeks continues to be the primary objective. The 1.2135 level is a key Fibonacci support level in that it represents a 50% retracement of the up move from the all time Euro lows at 0.8230 set in the October 2000 to the highs of 2008 at 1.6040.

GBPUSD – Sterling had a mixed day yesterday, initially rallying above $1.5000 against the dollar on the back of a Cameron/Clegg bounce before slipping back on Bank of England governor Mervyn King’s comments.

The $1.5020/50 area continues to provide solid resistance in the short term, however if we do get above this level we could see a quick rally up to $1.5120. The support around the $1.4780 area remains key for now and with the political haggling out of the way the pound needs to stay above this support area to re-test the $1.5000 area.

EURGBP – the Euro continues to remain weak against the pound, though it has recovered some ground after the Bank of England inflation report yesterday. The main resistance lies around the £0.8730/40 area. The key support level remains around the 2009, and last week’s lows at £0.8400.

USDJPY – The dollar yen has remained somewhat sidelined over the last 24 hours recovering above ¥93.00 after the bounce off the ¥92.15 support area. With declining highs and possible increased risk aversion the yen could continue to strengthen if we break below ¥92.15 and re-target the ¥91.30 area.

We would need to see a break above the ¥93.50/60 area to re-target the April highs around ¥95.00.

Spread betting, FX and CFDs are leveraged products. They carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved. Seek independent advice if necessary. Note that CMC Markets provide an execution-only service. CMC Markets research and charting tools are indicative and provided for information purposes and must not be relied upon as investment advice.

The above content does not constitute investment advice. Neither CMC Markets nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the above.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority, registration no. 173730.

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

Gold broke through to a record new high yesterday. Although if you are trading the gold market then note that the precious metal has a history of struggling to keep the momentum up in the short term at these points.

It is interesting to note that each time gold breaks through previous highs, there is usually at least one pull back over the next couple of weeks. This pullback is usually short lived though, more a pause for breath before shooting higher.

Which stock market has dropped the most this year?

As the fears over the Greek/ PIIGS bailout at least temporarily subside, world stock markets are starting to rally again. However, not all rallies have been equal. Some stock markets fell much further than others.

The France 40 (CAC) is currently the worst performer this year, having fallen hard and recovered slowly. It was revealed that French banks had a huge exposure to Greece and this is a big factor in the poor performance of the CAC this year.

Given the turmoil surrounding the general election, it is perhaps unsurprising that the FTSE 100 has also performed poorly. However, an equally significant factor has been the plunge in the share price of BP, the FTSE’s largest share by market cap.

Of most surprise is that the German Dax heads the tables as the best performing market since the 2010 peak, ie it has dropped the least since mid-April.

One reason is that the weak euro has been helping German exports and boosting the overseas earnings of major German companies such as Siemens and BMW.

Forex update

Forex markets have been relatively quiet this morning as the sovereign debt crisis comes off the boil and into a (temporary) simmer.

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

The market wrap from Michael Hewson, Analyst, CMC Markets.

UK markets have been buoyed this afternoon as David Cameron and Nick Clegg took centre stage at their first press conference.

The two men almost looked indistinguishable as they stood on the lawns of No 10 Downing Street, but they were given an indication of the economic challenges facing them earlier in the day with figures showing that unemployment surpassed 2.5m in the first quarter of 2010.

The FTSE250 is leading the way in market gains, up over 150 points as investors indulge in a spot of feel-good buying.

In economic data out today the number of people out of work climbed by 53,000 to 2.51m during the period, according to figures based on the International Labour Organisation (ILO) measure.

Travel Groups are the stand-out risers today with TUI Travel, Thomas Cook and Carnival all posting healthy gains.

Outsourcing companies Capita and Serco, which had been concerned about the hung parliament as they depend on government spending for revenues, are also higher.
In company news, Tullow Oil says it has continued to perform “very strongly” in 2010 and remains “very positive” about the outlook for the year. Analysts at Goldman Sachs raised their rating on the stock from “neutral” to “buy”.

Comet owner Kesa Electricals reported a 1.2% drop in like for like sales in the period from 9 January to 30 April as a positive performance at its larger French operations failed to offset weakness at the Comet retail chain.

Banks are weaker on concerns that Liberal plans to break up the banks or impose some form of bank levy could come to fruition now that we appear to have the makings of a working coalition, with Royal Bank of Scotland being the worst performer.

US markets opened higher in early trade on encouraging corporate news, some positive broker upgrades, and mixed economic news with the US trade deficit showing a figure of -$40.4bn, which was broadly in line with expectations.

Mixed Day for Sterling

Sterling has had a mixed day, initially rallying above $1.5000 against the dollar on the back of a Cameron/Clegg bounce – also note: Pound/Dollar spreads.

Bank of England governor Mervyn King was quick to throw a proverbial spanner in the works in his quarterly inflation report this morning, which delivered a sobering assessment of the problems facing the economy over the next few months.

He also indicated that interest rates were likely to remain low for the foreseeable future and this has led the pound to slide back.

Spread betting, FX and CFDs are leveraged products. They carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved. Seek independent advice if necessary. Note that CMC Markets provide an execution-only service. CMC Markets research and charting tools are indicative and provided for information purposes and must not be relied upon as investment advice.

The above content does not constitute investment advice. Neither CMC Markets nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the above.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority, registration no. 173730.

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

The Australian dollar is one the biggest fallers this morning, yet Gold is still hovering around record high levels.

Gold is an important commodity export for Australia, so it is unusual for the Aussie dollar not to benefit from a rise in the precious metal.

Judging by the weight of cross currency moves today, it seems that it’s the Aussie dollar that’s failing to hold its end up and this could be a sign that the commodity may be losing its appeal with investors.

It could be a good time for downside bets on the Australian Dollar/Yen or Australian Dollar/US Dollar.

The British pound is trading lower as the euphoria over a decision finally being made on the election dies down. It is a poignant day for the pound and British economy, but it’s unlikely to be a quiet one with a number of high profile news items due.

We have the UK claimant count change at 09.30 followed by the Bank of England inflation report at 10.30 AM.

Youngest UK Prime Minister in 200 Years.

So the horse trading and power games have ended, for now. David Cameron is now the youngest UK prime minister in 200 years.

The pound has rallied on the news, though the exact details on the makeup of his government are still coming out.

The biggest gains have come against the euro which is still suffering after the ECB bond purchase plan failed to sustain it initial euphoria.

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

The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning we are seeing a general move against the euphoria rebound from yesterday.

The euro is slipping back as traders ‘sweat the small stuff’ with the ECB bond purchase program.

The problem is that the fundamentals still haven’t changed – Greece, Spain and Portugal’s finances are still in dire straights, albeit with a less pressing deadline for debt repayments.

Sterling Crash

The pound continued its wild ride, crashing yesterday after it was announced that the Lid Dems had opened formal talks with the Labour party with Gordon Brown resigning as a key component of these talks.

The Pound-Euro Spread is currently $1.4873 – $1.4875 with Financial Spreads.

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