Yesterday saw most of the major European and US equity indices push marginally higher after what can only be described as a dismal week for stocks.

Against the backdrop of all the Greek political and financial uncertainty (which look likely to be with us for some time yet), FX spread betting investors weighed up mixed reads on the UK economy and a decision by the BoE not to increase the size of its quantitative easing programme.

Heading into the rate decision, 8 of 51 economists partaking in a Bloomberg survey had predicted an increase in the program size of at least £25 million.

When this failed to materialise, the pound rallied sharply, moving from levels near 1.6095 to a session high of 1.6183.

All eyes will now be on Governor King who is due to speak on May 16, when the Bank publishes its economic forecasts underpinning yesterday’s decision.

On the economic data front, UK March industrial production month-on-month fell 0.3%, in-line with consensus, while manufacturing production increased by a stronger-than-expected 0.9% month-on-month. While it’s still early days, it’s already looking like another tough one for Europe.

The same issues that have plagued online spread betting investors from the beginning of the week look set to haunt them into the close. The big question now is what is the circuit breaker? Some sort of palatable resolution to Greece’s political situation would be a good start.

If a broad-based coalition can somehow be cobbled together and have enough in common to ensure the country is willing to work with Greater Europe, that may lay the foundation for some much need stability and ease concerns of debt contagion. One can only hope.

Ahead of the European open we’re calling the FTSE 100 -26 at 5517, the DAX -46 at 6472 and the CAC -28 at 3102.

 
Contracts for differences (“CFD”) trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
 
Market Commentary by IG Index.
 
This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument by IG Index or Online-Spread-Betting.com, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets..
 
IG Index is a spread betting provider and is authorised and regulated by the Financial Services Authority, register number 114059.

Yesterday, Greece’s political and financial instability again took centre stage, driving European (with the exception of the DAX) and US markets lower across the board.

As expected, the deadlock over the formation of a new government continues in Greece, raising the prospect of a new election next month.

This comes after the radical Left Party gave up its bid to form the government when talks with the socialist PASOK Party failed.

Evangelos Venizelos, leader of the PASOK Party and former finance minister will receive the mandate to try to form the government on Thursday.

In other Greek news, the EFSF confirmed the release of €5.2 billion to Greece that will enable it to repay €3 billion in debt due on May 18.

With an estimated €3 billion in its Treasury cash reserves, Greece is expected to run out of cash in July if it does not receive further disbursements from the EU, something that will be determined after sign-off from the Troika.

Weighing into the debate, the ECB’s Nowotny warned the Greek political parties by saying that the EU cannot help if Greece refuses to cooperate, and that EFSF aid would be disbursed ’only with conditions attached‘.

The other major talking point of the session was the Spanish government’s expected announcement (tomorrow) of the partial nationalisation of a major domestic bank and the need for up to €45 billion to recapitalise the banking sector.

Speaking on the issue, Prime Minister Rajoy said ’the government guarantees the stability of the overall banking system‘, in an attempt to reassure the bank’s deposit holders.

Today promises to be another interesting one across Europe.

Against the backdrop of the escalated political uncertainty surrounding Greece, we have manufacturing and industrial production data due out in the UK.

We also have the BoE rates decision where there are some spread betting investors predicting more QE will be announced, particularly after yesterday’s weak BRC retail sales report which revealed the biggest percentage fall in retail sales since March 2011.

Ahead of the European open we’re calling the FTSE-5 at 5525, the DAX +6 at 6481 and the CAC -12 at3107.

 
Contracts for differences (“CFD”) trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
 
Market Commentary by IG Index.
 
This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument by IG Index or Online-Spread-Betting.com, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets..
 
IG Index is a spread betting provider and is authorised and regulated by the Financial Services Authority, register number 114059.

After a day’s delay, it seemed yesterday that European and US spread betting markets caved into the fear and uncertainties that have once again flared up across Europe.

The uncertainty about the next government in Greece continued with Tsipras’ radical left party still unable to find enough support to form a left-led coalition.

Tsipras still has two more days to garner a majority backing, however, if no party grouping is able to claim a majority by May 15, the President could ask the parties to agree to a caretaker government ahead of fresh elections.

The situation is clearly a debacle, and the longer it drags on the worse it will be for both Europe and Greece, the latter of which still has to receive Troika sign-off for the next tranche of its aid package.

On a more positive note, Germany’s March industrial production rose significantly more than expected to 2.8% month-on-month versus a consensus gain of 0.8%.

This is the biggest jump since July 2011 and one of the strongest month-on-month numbers since records began, which suggests the IFO was on the money while the PMI’s have been a bit misleading.

Also on a positive note were some comments from the ECB’s Jorg Asmussen, who said he would expect France to continue to ’abide by the fiscal compact,’ and that ’any growth elements should not weaken the compact‘.

Speaking on the issue of Greece, Asmussen said ’there is no alternative to agreed reforms for Greece to stay in the Eurozone‘.

The situation remains volatile and this alone is likely to keep online spread betting investors both cautious and nervous after a period of relative stability (compared to 2011) so far this year.

Ahead of the European open we’re calling the FTSE +4 at 5558, the DAX +12 at 6456 and the CAC +7 at 3131.

 
Contracts for differences (“CFD”) trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
 
Market Commentary by IG Index.
 
This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument by IG Index or Online-Spread-Betting.com, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets..
 
IG Index is a spread betting provider and is authorised and regulated by the Financial Services Authority, register number 114059.

European and US equities showed remarkable resilience heading into yesterday’s session.

In the lead-up to Asian trading, futures for the major equity indices on both sides of the Atlantic were pointing to a bit of bloodbath, with fears that incoming governments might jeopardise the relative stability seen in Europe over the last two months.

Thankfully, the doomsday scenario many online spread betting investors feared yesterday failed to materialise, and equities (with the exception of a small loss for the Dow) were able to edge higher.

There were many reasons why last night could have been much worse – Greece’s New Democracy party leader, Antonis Samaras, failed to form a new government (placing agreed austerity measures in jeopardy).

France’s new socialist government seemingly on a collision course with Germany over ‘growth versus austerity’, plus warnings from an unnamed Greek finance ministry official that the country may run out of funds by the end of June.

Helping ease these fears was Angela Merkel congratulating Francois Hollande on his election, as the new French President said he ’will be received by Germany with open arms‘, and that both countries will ’work together‘.

Also, Fitch Ratings reported that the election of Hollande did not have any implications for France’s AAA rating.

Meanwhile, a Spanish government source suggested that measures to help the Spanish banking system would be announced on Friday, and that these measures could include the creation of a ’bad bank‘ with a 10 to 15 year expected lifespan.

Still, while there was relative calm in the spread betting markets last night, you get the feeling we are set for some heightened volatility across Europe in the near term, as France’s new socialist government finds its feet and the diabolical Greek electoral situation plays out.

Today, keep an eye out for Mario Draghi speaking and German Industrial production data, which is expected to show 0.8% growth, up from a 1.3% contraction last month.

Ahead of the European open we’re looking at a mixed picture, with the FTSE -10 at 5645, the DAX +17 at 6586 and the CAC spread betting indices -5 at 3209.

 
Contracts for differences (“CFD”) trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
 
Market Commentary by IG Index.
 
This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument by IG Index or Online-Spread-Betting.com, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets..
 
IG Index is a spread betting provider and is authorised and regulated by the Financial Services Authority, register number 114059.

Where to Spread Bet on Home Retail Group

You can trade on spread betting markets such as Home Retail Group with spread betting companies like:

• FinancialSpreads
• GFT
• CityIndex

To see which companies offer 24 hour trading, new account offers, stop losses and trading charts see Spread Betting Companies.

How to Spread Bet on Home Retail Group

If you decide to spread trade on UK shares like Home Retail Group then, on visiting a spread betting website like Financial Spreads on Friday, you may have seen a spread of 79.9p – 80.4p.

This means you could spread bet on Home Retail Group to increase higher than 80.4p or to decrease lower than 79.9p.

With shares spread betting, you bet on every unit the market moves up or down. With the Home Retail Group market a unit is 1p of the share’s price movement.

As an example, you might choose to bet £20 for every penny Home Retail Group goes up or down.

Buying – Spread Betting on the Market to Go Up

If you were to go long of Home Retail Group at 80.4p and the shares went up then the spread might become 84.4p – 84.9p. If so, you might want to close your trade for a profit by selling at 84.4p.

Profits (or Losses) = (settlement value of the market – opening value of the market) x stake per penny
Profits (or Losses) = (84.4p – 80.4p) x £20 per penny stake
Profits (or Losses) = 4.0p x £20 per penny
Profits (or Losses) = £80.00 profit

The markets can of course fall, if the market had decreased to, for example, 75.6p – 76.1p, you may want to close your spread bet to limit your losses. If this were the case, you would sell the market at 75.6p.

So, with the same £20 per penny stake:

Profits (or Losses) = (settlement value of the market – opening value of the market) x stake per penny
Profits (or Losses) = (75.6p – 80.4p) x £20 per penny stake
Profits (or Losses) = -4.8p x £20 per penny
Profits (or Losses) = -£96.00 loss

Selling – Spread Betting on the Market to Go Down

A key benefit of spread trading is that you can go short of the markets.

To start with, the spread betting price was 79.9p – 80.4p.

If you were to sell Home Retail Group at 79.9p and the shares fell then you might see the spread move to 75.8p – 76.3p. Assuming this was the case, you could close your bet for a profit by buying at 76.3p.

Profits (or Losses) = (opening value of the market – settlement value of the market) x stake per penny
Profits (or Losses) = (79.9p – 76.3p) x £20 per penny stake
Profits (or Losses) = 3.6p x £20 per penny
Profits (or Losses) = £72.00 profit

Financial markets also move up, if the market had increased to 83.7p – 84.2p, you might decide to close your trade to prevent further losses. If that were to happen, you would buy the market at 84.2p.

With the same £20 per penny stake:

Profits (or Losses) = (opening value of the market – settlement value of the market) x stake per penny
Profits (or Losses) = (79.9p – 84.2p) x £20 per penny stake
Profits (or Losses) = -4.3p x £20 per penny
Profits (or Losses) = -£86.00 loss

Home Retail Group Rolling Daily prices correct as of 04-May-12.

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.

Where to Spread Bet on Petropavlovsk

You can trade on spread betting markets such as Petropavlovsk with spread betting companies like:

• CapitalSpreads
• Spreadex
• CMC Markets

To see which companies offer 24 hour trading, new account offers, stop losses and trading charts see Spread Betting Companies.

How to Spread Bet on Petropavlovsk

Should you decide to spread trade on UK shares like Petropavlovsk then, on visiting a spread trading website like Financial Spreads on Friday, you may have seen a spread of 431.9p – 433.8p.

As a result, you could spread bet on Petropavlovsk to move higher than 433.8p or to move lower than 431.9p.

If you are spread trading, you trade on every unit the market rises or falls; for the Petropavlovsk market a unit is 1p of the share’s price movement.

So, you could choose to bet £10 for every penny Petropavlovsk increases or decreases.

Betting on the Market to Rise

If you were to buy Petropavlovsk at 433.8p and the shares rose then the spread could change to 444.6p – 446.5p. Therefore, you might want to close your bet for a profit by selling at 444.6p.

Profit/Loss = (final level of the market – initial level of the market) x stake per penny
Profit/Loss = (444.6p – 433.8p) x £10 per penny stake
Profit/Loss = 10.8p x £10 per penny
Profit/Loss = £108.00 profit

Financial markets also move down, if the market were to drop down to 421.7p – 423.6p, you might want to close your bet to restrict your losses. In that case, you would sell your trade at 421.7p.

You would close your bet with the same £10 per penny stake:

Profit/Loss = (final level of the market – initial level of the market) x stake per penny
Profit/Loss = (421.7p – 433.8p) x £10 per penny stake
Profit/Loss = -12.1p x £10 per penny
Profit/Loss = -£121.00 loss

Betting on the Market to Fall

A key advantage of placing a spread trade is that investors can short the markets.

To start with, the market was 431.9p – 433.8p.

If you were to go short of Petropavlovsk at 431.9p and the online spread betting market decreased then you might see the spread move to 421.4p – 423.3p. If that happened, you could decide to take your profits by closing your trade at 423.3p.

Profit/Loss = (initial level of the market – final level of the market) x stake per penny
Profit/Loss = (431.9p – 423.3p) x £10 per penny stake
Profit/Loss = 8.6p x £10 per penny
Profit/Loss = £86.00 profit

On the other hand, if the market had moved up to 439.7p – 441.6p, you may want to close your trade to prevent further losses. Assuming this was the case, you would buy your spread bet at 441.6p.

So, with the same £10 per penny stake:

Profit/Loss = (initial level of the market – final level of the market) x stake per penny
Profit/Loss = (431.9p – 441.6p) x £10 per penny stake
Profit/Loss = -9.7p x £10 per penny
Profit/Loss = -£97.00 loss

Petropavlovsk Rolling Daily spread betting prices taken as of 04-May-12.

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.

Where to Spread Bet on Imagination Technologies

You can trade on spread betting markets such as Imagination Technologies with spread betting companies like:

• Financial Spreads
• Spreadex
• City Index

To see which companies offer 24 hour trading, new account offers, stop losses and trading charts see Spread Betting Companies.

How to Spread Bet on Imagination Technologies

If you are going to spread bet on UK shares like Imagination Technologies then, on visiting a spread trading website like Capital Spreads on Friday, you may have seen a spread of 614.6p – 617.4p.

That means you can spread bet on Imagination Technologies to go above 617.4p or below 614.6p.

If you are spread betting, you bet on every unit the market moves up or down. Specifically, for the Imagination Technologies market a unit is 1p of the share’s price movement.

For example, you could decide to spread bet £3 for every penny Imagination Technologies goes up or down.

Spread Betting on the Market to Increase

If you were to go long of Imagination Technologies at 617.4p and the shares increased then the spread might become 648.3p – 651.1p. If that happened, you might choose to close your trade for a profit by selling at 648.3p.

Profit or Loss = (closing value of the market – initial value of the market) x stake per penny
Profit or Loss = (648.3p – 617.4p) x £3 per penny stake
Profit or Loss = 30.9p x £3 per penny
Profit or Loss = £92.70 profit

Nevertheless, if the market had decreased to, as an example, 589.6p – 592.4p, you may want to close your bet to restrict your losses. If so, you would sell your trade at 589.6p.

With the same £3 per penny stake:

Profit or Loss = (closing value of the market – initial value of the market) x stake per penny
Profit or Loss = (589.6p – 617.4p) x £3 per penny stake
Profit or Loss = -27.8p x £3 per penny
Profit or Loss = -£83.40 loss

Spread Betting on the Market to Decrease

One useful benefit of placing a spread trade is that investors can sell the markets.

The initial spread betting price was 614.6p – 617.4p.

If you were to go short of Imagination Technologies at 614.6p and the shares decreased then the spread could become 573.4p – 576.2p. Assuming this was the case, you could close your trade for a profit by buying at 576.2p.

Profit or Loss = (initial value of the market – closing value of the market) x stake per penny
Profit or Loss = (614.6p – 576.2p) x £3 per penny stake
Profit or Loss = 38.4p x £3 per penny
Profit or Loss = £115.20 profit

The markets can of course rise, if the market were to rise to, for example, 646.4p – 649.2p, you might decide to close your trade to prevent further losses. If that were to happen, you would buy at 649.2p.

Therefore, with the same £3 per penny stake:

Profit or Loss = (initial value of the market – closing value of the market) x stake per penny
Profit or Loss = (614.6p – 649.2p) x £3 per penny stake
Profit or Loss = -34.6p x £3 per penny
Profit or Loss = -£103.80 loss

Imagination Technologies Rolling Daily market taken as of 04-May-12.

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.

So, a very calm Asian session has done little to rock the European open, and it looks as though downside will be seen across the board ahead of some major event risk.

With non-farms and the Greek elections at the forefront of traders’ minds, investment managers are also starting to think seriously about the upcoming Facebook road show, with the sceptics becoming more and more prominent.

With talk the valuation could be $100 billion, a simple comparison with Google has been drawn where it has half the market cap and at the same time, one tenth of the top line. It does seem that it needs to priced right or hedge funds will have a field day trading on the short side.

Equity bulls, regardless of whether they plan to take part, will hope it goes away as well, as the float has the premise to influence sentiment.

It is worth pointing out that while Sunday may be better known for the Greek and French elections, the perigee moon on Sunday will appear 14 percent bigger and 30 percent brighter than the average full moon.

Effectively when the moon reaches perigee it is the closest to the earth and has its strongest effect over human emotion, apparently making them restless, nervous and agitated. It sounds like nonsense, but previous perigee moons have coincided with big moves in risk assets. The fact it falls on the same day as the Greek election could be fate!

Volatility has been non-existent in Asian trade, seen front and centre in EUR/USD which has traded in a 19-point range, with S&P futures completely unchanged.

Traders are still coming to terms with ECB president Mario Draghi, who disappointed some who were hoping he would acknowledge the weakness in manufacturing and other data points and indicate easing at a future meeting.

However, he did leave the door open for cuts if its growth outlook proves too optimistic.

Mr Draghi stressed the impact of the LTRO (long-term refinancing operation) is not fading away, suggesting we will not see a third round of liquidity injections anytime soon, while also saying that the ECB ‘did not discuss any specific move in interest rates’.

It appears the ECB’s baseline scenario has not changed, and it continues to foresee a ‘gradual recovery in the course of the year’, while the Central Bank still feels that monetary policy remains accommodative.

Given the uptick in EUR/USD, it seems the FX spread betting market was positioned for more dovish narrative.

Still, the leading indicators such as the new orders component in the recent PMI’s suggest further downside going forward, so don’t fully rule out further measures by the Central Bank.

Today’s non-farm jobs lottery is the key highlight in the US session, and while consensus is calling for an improvement from the March print, with 160,000 jobs created, the analysts’ opinions are ranging from 89,000 to 210,000.

Given the ADP payrolls report, uptick in the initial claims and lower pace of hiring seen in the ISM services manufacturing report, expectations are low, so it appears the market is probably positioned for a number just north of 100,000.

It is fair to say we will see a pretty subdued trade going into the report, however, even when we do see the payrolls report, traders then need to position themselves for the weekend drama, with the Greek elections the major event risk.

Polls suggest the current coalition (Pasok and the New Democracy party) may have a tough time getting the required votes to keep the austerity regime going, so any uncertainty caused by a failure to achieve majority will certainly cause risk to be paired back on Monday.

In shares spread betting, BNP Paribas reported Q1 net income of €2.87 billion (+9.6 percent) versus consensus of €2.933 billion and revenue of €9.89 billion, which also looks a touch below expectations.

RBS release Q1 2012 results, with adjusted profit before tax expected to be around ₤662 million, and if you include non-operating items, £193 million.

Obviously the financials are important, but traders will be keen to assess both the performance and outlook of the new markets division. The stock is still up 21 percent, despite its pullback from ₤30 and trades on a pretty undemanding PE.

Ahead of the open we are calling the FTSE at 5547 -21, the DAX at 6663 -31, the CAC at 3206 -17 and the IBEX at 6829 -22.

 
Contracts for differences (“CFD”) trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
 
Market Commentary by IG Index.
 
This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument by IG Index or Online-Spread-Betting.com, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets..
 
IG Index is a spread betting provider and is authorised and regulated by the Financial Services Authority, register number 114059.

If traders can take two themes out of the US session, perhaps one is that that US traders are looking less and less at European equity moves, and the other is that the USD is being influenced by the markets’ view of potential QE3.

This is on the back of US data outcomes, rather than just simply risk on/risk off.

The view that as the US data rolls over, we get closer to another round of asset purchases, is potentially the biggest saving grace of the euro, AUD and other risk forex bulls at present. This was seen evidently in the price action, post the US ADP payrolls report.

Clearly the sizeable miss to consensus is consistent with some of the low-ball estimates expected for Friday’s non-farm print, and while the two are unrelated, it fits in nicely with the higher trend seen in jobless claims.

The euro PMI data has been largely discussed, but it is worth highlighting the Italian PMI data, which can really only be described as terrible.

While the headline print was significantly below expectations, drilling down the new orders sub-component dropped the most in three years to 39.2, and is in deep contractionary territory and simply does bode well for future reads. Despite this, Italian yields only gained one basis point.

The fact that we saw weak European employment data (the highest since 1997), European PMI and ADP jobs data fail to cause too many ripples in the S&P 500 shows just how resilient US equities are right now.

If you are still buying bullish stocks, why sell your clients’ holdings when Ben Bernanke will prop up prices if we don’t see a ‘gradual’ recovery?

European spread betting markets missed out on most of the rally from US session lows, so have the benefit of pricing that in on open.

S&P futures are up about 0.2% from the close of the European cash market, but our opening calls suggest these bourses could marginally outperform these leads.

Asian markets seem directionless given Japan is offline to celebrate Constitution Memorial Day, and will be off tomorrow as well for Greenery Day.

It is fair to say though, that caution is warranted ahead of the upcoming event risk. Spain will be looking to tap the market for around $1.5 billion to $2.5 billion in three- and five-year bonds, while France is looking to raise $6.5 billion in four different issues.

As always, keep an eye on the bid to cover given average yields achieved in previous auctions were much lower, so it is clear borrowing costs will rise.

In the US, ISM services is released and expectations are for a softening in the pace of growth seen (consensus is for 55.3 from 56). US economic growth is predominantly driven by retail spending, so keep an eye on the employment sub-component as this is widely seen as a good read-through to Friday’s non-farms report.

Traders seem to be piling on the short euro bandwagon in anticipation of the upcoming ECB decision. No one really expects a change in policy, although the wording on the statement will be of more significance.

There is a strong possibility that we will see Mr Draghi remove his previous statement on ‘upside risks prevailing’ with regards to inflation, while he may alter his acknowledgement that a ‘moderate recovery is expected in the course of the year’.

If this materialises, the FX spread betting market may look to price in rate cuts in future meetings, with only eight basis points of cuts over twelve months currently being priced in, so this should in theory see EUR/USD head towards the low end of the recent range.

Given the unemployment and PMI data, the market will be craving any signs of upcoming policy action and failure to recognise the economic woes could see risk assets under pressure.

Ahead of the open we are calling the FTSE at 5776 +18, the DAX at 6748 +38, the CAC at 3242 +16 and the IBEX at 6847 +16.

 
Contracts for differences (“CFD”) trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
 
Market Commentary by IG Index.
 
This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument by IG Index or Online-Spread-Betting.com, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets..
 
IG Index is a spread betting provider and is authorised and regulated by the Financial Services Authority, register number 114059.

The FTSE had the luxury of pricing in yesterday’s strong US ISM report, and it looks as though the data will feed into the DAX, CAC and IBEX when they resume trading today.

It is a new month and with it brings new money inflows and this is where program buy orders are set, so this could see good buying emerge as the day rolls on.

The S&P futures are up 0.6% from the close of these European benchmarks. Using this as a guide, we should see modest upside on open, although the S&P futures are actually 0.4% lower from the close of the FTSE, so the UK bourse should come under modest profit taking on open.

Traders are really struggling to get a handle on data at present, and it was clear from the price action in the USD and equity markets that the poor regional manufacturing reports (namely Dallas and Chicago) had seen traders position for a weak national report.

It was also unclear whether the strong performance in manufacturing in Q1 was positively impacted by weather; the April print seems to have put that notion to bed.

Breaking the report down, we saw strength in new orders, production, supplier deliveries and employment, which has got traders feeling just a little more confident about Friday’s payrolls report.

Unfortunately, with manufacturing making up a relatively low percentage of US GDP, the strong sub-component may have a limited impact on the bigger picture.

Having already seen the official Chinese manufacturing, which was the highest in a year, and the UK PMI’s which grew at a slower pace; all eyes now fall on Europe with the PMI data set to remain in contractionary territory.

The ‘flash’ reading was released a week ago and showed a slowdown from 47.7 to 46.0, however, that took into account data from just Germany and France. Today’s report will include Spain, Italy and other peripheral nations, so further weakness looks ominous.

The Italian employment rate also looks set to tick up to 9.4% from 9.3%, which is well below that of Spain, but still of major concern.

Again we focus on EUR/USD, and while we may well see the ever diverging growth differentials between European and the US, the pair doesn’t seem to want to do anything.

It really does feel like the calm before the storm, with EUR/USD FX spread betting pair trading in a 112 point range in the last five sessions and 38 points on a closing basis.

It has been a relatively lively day in Asia, and one gets the sense that the world is starting to see China, or at least Chinese equities, in a positive light.

The Shanghai Composite has broken trend line resistance and is only 0.7% away from its 200-day moving average, a fate it hasn’t seen in 51 weeks.

The index was given a bit of a nudge higher today, as the HSBC PMI read showed improvement and the Securities Regulator cut trading fees. However, it is becoming apparent that the market is warming to this spread betting index, and could be ready to see some solid upside in the coming months.

Traders will also be keen to get a read on US factory orders (expected to fall 1.7%), but as always when one is trying to adjust positioning ahead of the payrolls report we look to the ADP report for guidance.

Consensus is for 170,000 jobs to be created, a slowdown of 39,000 from the previous month.

A miss will have analysts revising their estimates for Friday, and of course the QE3 trade, where after initial weakness in risk assets, the ‘Bernanke put’ kicks in and support is seen.

Ahead of the open we are calling the FTSE at 5797 -15, the DAX at 6809 +48, the CAC at 3239 +27 and the IBEX at 7027 +17.

 
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Market Commentary by IG Index.
 
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