Online Spread Betting Blog

Will Strong Japanese GDP Spark Snap-Back Rallies in Spread Betting Markets?

James — Thu, 17 May 2012 09:06:00 +0000

European and US equities have tried in vain over the last two sessions to move higher, but any momentum has been sharply retracted as headlines around Greece hit the wires.

One feels that in the absence of any negative news today, and provided the US data continues its two-day upside surprise, we could see a snap-back rally emerge.

Asian markets have started the ball rolling with a helping hand from a strong Japanese GDP print, although the ASX 200 has been languishing.

US futures have started making a move higher and look delicately poised to either roll over or see a sizeable move higher, while European spread betting markets looks set for an uneventful start, with a flat open at present.

The selling we have seen has felt relatively orderly, despite the implications of a Greek exit and subsequent contagion on confidence.

The FTSE has strong support at 5216, although with the index opening just above 5400, a 3.4 percent drop today is clearly not on the cards, but one suspects could be good buying if markets continue their journey lower.

The IBEX looks set for perhaps the strongest open (on a percentage basis), and given the recent break of the 2009 pivot low at 6702, worryingly the index is in blue sky territory. The next major support level comes in at the 2003 low at 5447 – 17 percent lower!

There is clear concern about a run on Greek banks, with further narrative of depositors pulling out savings, although the news the ECB would halt monetary policy operations with certain Greek banks stole the headlines.

This itself is quite misleading, and possibly the biggest fallout for us on the back of this is a further eroding of confidence and therefore a continued run on Greek banks.

The ECB is unlikely to let a Greek bank fail through withholding liquidity. It seems once the financial spread betting market had time to consider the narrative, it found that the ECB would allow these banks to return to normal ECB funding channels in the next few days.

However, it is a prime example of how on edge this market is right now. We’re at a clear inflection point and one has to feel encouraged by the fact that Greek voters still want to be part of the EMU.

At the same time, the costs of leaving the EMU are so high to all parties concerned that to us swings the balance of probability into the ‘Greece will not leave the EMU’ camp, but it really is a toss of a coin at this stage.

David Cameron will be addressing a business audience today in north-West England, and he is expected to speak frankly about his fears of a euro break-up, something which will probably cause a reaction from his EU counterparts.

Looking forward, despite a flat call (as it stands) traders will be keen to hear more on the upcoming US weekly jobless claims, Philli Fed report and leading indicators.

Spain will also tap the market for around €1.5 to 2.5 billion in three- and four-year bond auctions.

While Spanish yields came sharply off their high of 6.51 percent, to settle at 6.29 percent, they are still at unsustainable levels. All eyes fall on the bid to cover ratio, given yields are significantly higher than where the Tesoro previously auctioned these bonds only recently.

Facebook is also very much in the limelight, given it prices today. Despite insiders selling down stock, our grey market suggests our clients see a market cap of $124 billion at the close of its first day of trading – a 19 percent rally from the top end of its range.

Ahead of the open we are calling the FTSE at 5406 +1, the DAX at 6384 unchanged, the CAC at 3041 -7 and the IBEX at 6630 +19

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.

Ongoing Greek Government Issues Cause Euro FX Spreads to Slump

James — Wed, 16 May 2012 08:55:24 +0000

Yesterday’s European and US equity sessions were a case of same story, different day.

We now seem to be back in that ‘Groundhog Day’ phase that characterised so much of last year, where European issues (Greece in particular) seemed to trump just about everything else.

The news out of Greece overnight was that it is set for elections again in June after a two-hour meeting of five party leaders yielded no breakthroughs in forming a new government.

Though this was not a surprise, the clear lack of any middle ground among the various parties at the table triggered a sharp ‘risk off’ reaction, with the euro FX spread betting markets slumping 80 pips on the announcement.

Also hurting sentiment towards the shared currency were reports that €700 million of cash deposits had been withdrawn from Greece’s major banks in the week and a half since the stalemate election.

Some are suggesting that Greek citizens now see ‘cash under the mattress’ as being a safer option than cash in the bank.

These negatives overshadowed some of the more positive news on the day, namely that German GDP came out stronger than expected (+0.5% versus a +0.1% consensus), and the fact that Greece met its €0.4 billion foreign-law bond redemption.

While the risk off theme looks set to continue in the near term, today’s UK unemployment data, Governor King’s inflation report and European CPI will hopefully provide a much needed distraction from the circus going on in Greece.

Ahead of the open we’re looking at another tough start for European spread betting indices, with the FTSE called -51 at 5386, the DAX -43 at 6358 and the CAC -13 at 3022.

Expected European GDP Contraction Could See EUR/USD Spreads Weaken

James — Tue, 15 May 2012 09:37:48 +0000

Asian markets, it seems got the trade wrong yesterday, with equities seeing modest gains despite being privy to virtually the same information that saw European and US traders rotate further out of equities and into fixed income.

European equities look set to open lower. However, with the S&P 500 falling eight out of the last nine days, and the dollar index (DXY) gaining a record eleventh day in a row, it seems the bears may want to see fresh news before adding to existing positions.

Meanwhile, the bulls will probably want to see how things stabilise before dipping their toes in.

EUR/USD seems supported at 1.2790, ahead of the January low of 1.2624, and a test of these levels in the short term cannot be ruled out, with volatility likely to pick up given today’s event risk.

European GDP is expected to contract 0.2%, effectively taking the region into a technical recession after last quarter’s 0.3% contraction.

This is sure to get the headlines, despite GDP being a lagging indicator given the world is ever sceptical of global growth, especially in Europe where the implications of tough austerity have yet to run its full course.

Newly appointed French President Mr. Hollande is scheduled to meet Angela Merkel for the first time. Traders will not only be keen to breakdown their dialogue, but their body language will be highly scrutinised given the break-up of the cosy ‘Merkozy’ relationship.

One suspect’s that despite the firm stance expected from Mr. Hollande in pushing for growth initiatives, it will be smiles all-round.

Greece, as always, is front and centre, and the online spread betting market will pay close attention to any slim possibility of the President pulling off an eleventh hour reprieve and forming a coalition.

Many will also be keen to hear more on the €436 million principal repayment on a floating rate note held under UK law and therefore not subject to the recent debt swap agreement.

Greece has not decided whether it will or will not pay out, and a failure to pay today would go some way in seeing the country enter a default after an extended thirty day grace period.

An event some of the global hedge funds who bought the debt will hope happens, given their insurance against default (credit default swaps) would pay out at face value.

Greece will also try and tap the bond market for €1 billion in 91-day bills, how this goes is anyone’s guess given we simple don’t know if Greece will be making plans to return to the drachma by then.

Moody’s downgrade of 26 Italian banks will be a headwind for both equities and Italian bonds, and one suspects Spanish banks, given they are next on Moody’s review.

The IBEX once again is looking to open within a fraction of the cycle low from March 2009 at 6702.

It is not all about Europe though, the US economy will have its chance to show its underperforming peers how it’s done when it releases retail sales (expected to gain 0.1%) and empire manufacturing (expected to improve to a reading of 9).

With US seven-year treasury yields matching record lows, and the all-important ten-year seven basis points from hitting the September lows, some solid data in manufacturing and consumer spending would cause sellers to emerge.

This would bring much needed relief to risk assets, notably WTI, which is trading at 2012 lows and now 3% below the 200-day moving average.

Ahead of the open we are calling the FTSE at 5447 -18, the DAX at 6432 -19, the CAC at 3047 – 10 and the IBEX at 6791 – 18

Drop in Chinese in Interest Rates Buoys Asian Financial Spread Betting Markets

James — Mon, 14 May 2012 08:36:23 +0000

Across Asia, markets have had a mixed reaction to the developments from the weekend, with Japan and Australia a touch higher, though Chinese markets are weaker.

It is clear that risk sentiment remains subdued amid uncertainty surrounding the Greece political situation. In US trade, markets were mostly softer, as Greek uncertainty continued to affect sentiment. Greek coalition talks have reached an impasse, with another election looking increasingly likely. In the event of a second election, Syriza seems like it will be the likely victor.

China growth concerns increased following a round of disappointing economic data. The JP Morgan drama also continued to affect financials, as Fitch cut JP Morgan’s rating a notch, and S&P put it on negative watch after the bell on Friday.

The PBOC’s decision to cut the RRR by 50 basis points effective May 18 2012, saw some positive sentiment filter through in Asian markets earlier on. This move was widely expected, and many analysts anticipate further easing following the downside surprises in the April macro data released last week.

Clearly the fall in interbank interest rates since May suggests this was not a liquidity issue, and is more a gesture that Chinese officials stand ready to support as they change their growth model from export-led to one of domestic demand. Most of the markets in the region are now positive, with the Hang Seng and Nikkei both climbing 0.3%.

In financial spread betting, European markets are facing a softer open, after having been quite resilient in Friday’s trading session. However, US markets are pointing to a flat to mildly negative open after having given up ground on Friday.

European markets will not only have to factor in the weak US close, but also a barrage of risk negative headlines, which suggests Greece is looking more likely than not to default on its future debt payments, as aid from the EU/IMF is withheld.

The structural shifts in Europe are becoming more evident by the day, with peripheral countries rejecting the current, mostly capitalist governments that have worked so closely with core Europe in sanctioning harsh austerity measures.

German voters on the other hand, have once again shown their anger at years of throwing good money after bad by voting against Angela Merkel, with her CDU party backing up lasts weekend’s regional disaster, with voters in the North Rhine-Westphalia region repositioning themselves to opposition party SPD. The SPD-Green coalition now controls 11 of 16 regions, and this cannot be a good omen for Angela Merkel’s prospects in the national elections in 18 months’ time.

The fact that the Greek President has failed to form an eleventh hour united coalition is no major surprise, and makes the June 10/17 elections extremely interesting, and will keep a lid on gains in risk assets given anti-bailout party Syriza has the wind blowing against its back.

Selling rallies in risk assets could be a potential way to make money in most asset classes, given the event risk is still very real this week. Eurogroup meetings over the next couple of days will centre on Greece, but perhaps on a positive note, we may see the contours of a growth pact which could co-exist with the fiscal compact.

The Aussie market shrugged off a fairly negative start for risk assets, and traded flat to positive for most of the session. The ASX200 is currently up just 0.1%, with telecoms leading the way, while the resources are struggling.

The Aussie dollar’s weakness seems to have gone a long way towards supporting local equities and keeping the market above water. The AUD/USD spread betting market momentarily dipped below parity, printing a low of 0.99961 today. Dovish comments by RBA Deputy Governor Lowe contributed to AUD weakness.

We have seen several analysts revise their targets for the pair, and downside pressure persists. It is good to see some relief for the retailers, with JB Hi-fi and Harvey Norman gaining ground as the easing cycle and weaker Aussie dollar help sentiment.

Investors are also continuing to chase yield, with stocks like Telstra and Commonwealth Bank outperforming. Tomorrow we have monetary policy meeting minutes to look out for with the Aussie dollar largely in focus.

Online Spread Betting Guide to Speculating on the Italy 40 Index

James — Sun, 13 May 2012 06:35:51 +0000

Where to Spread Bet on the Italy 40

You can trade on spread betting markets such as the Italy 40 with spread betting companies like:

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 the Italy 40

If you are going to spread bet on an index like the Italy 40 then, looking at IG Index on Friday, you may have seen a spread of 13819.5 – 13829.5.

This means you could spread trade on the Italy 40 to increase above 13829.5 or decrease below 13819.5.

If you are spread trading, you bet on every unit the market increases or decreases; for the Italy 40 market a unit is 1 point of the index’s price movement.

For example, you could decide to spread bet £1 for every point the Italy 40 increases or decreases.

Betting on the Market to Rise

If you bought the Italy 40 at 13829.5 and the index increased then the spread might change to 13974.7 – 13984.7. If that were to happen, you might decide to close your trade for a profit by selling at 13974.7.

Profit/Loss = (final level of the market – initial level of the market) x stake per point
Profit/Loss = (13974.7 – 13829.5) x £1 per point stake
Profit/Loss = 145.2 points x £1 per point
Profit/Loss = £145.20 profit

The indices spread betting markets can of course fall, if the market had moved down to, for example, 13698.1 – 13708.1, you might want to close your trade to restrict your losses. In that case, you would sell the market at 13698.1.

You would close your bet with the same £1 per point stake:

Profit/Loss = (final level of the market – initial level of the market) x stake per point
Profit/Loss = (13698.1 – 13829.5) x £1 per point stake
Profit/Loss = -131.4 points x £1 per point
Profit/Loss = -£131.40 loss

Betting on the Market to Fall

One major advantage of spread betting is that you can sell the markets.

The original market was 13819.5 – 13829.5.

If you were to go short of the Italy 40 at 13819.5 and the index decreased then the spread could become 13671.7 – 13681.7. Therefore, you might decide to close your bet for a profit at 13681.7.

Profit/Loss = (initial level of the market – final level of the market) x stake per point
Profit/Loss = (13819.5 – 13681.7) x £1 per point stake
Profit/Loss = 137.8 points x £1 per point
Profit/Loss = £137.80 profit

Markets can also rise, if the market had moved up to, for example, 13934.2 – 13944.2, you may decide to close your spread bet to prevent further losses. If this were the case, you would buy your spread bet at 13944.2.

So, with the same £1 per point stake:

Profit/Loss = (initial level of the market – final level of the market) x stake per point
Profit/Loss = (13819.5 – 13944.2) x £1 per point stake
Profit/Loss = -124.7 points x £1 per point
Profit/Loss = -£124.70 loss

Italy 40 Rolling Daily prices accurate as of 11-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.

Financial Spread Trading Guide to Speculating on Polymetal International Shares

James — Sat, 12 May 2012 06:33:55 +0000

Where to Spread Bet on Polymetal International

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

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 Polymetal International

If you are going to spread trade on UK shares such as Polymetal International then, looking at a spread trading company’s website like Capital Spreads on Friday, you may have seen a spread of 792.6p – 795.4p.

Therefore, you can spread trade on Polymetal International to increase higher than 795.4p or to decrease lower than 792.6p.

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

For instance, you might decide to spread bet £5 for every penny Polymetal International increases or decreases.

Buying – Spread Betting on the Market to Go Up

If you bought Polymetal International at 795.4p and the shares went up then you might see the spread move to 816.2p – 819.0p. If this were the case, you might decide to take your profits by closing your spread trade at 816.2p.

P&L = (closing value of the market – initial value of the market) x stake per penny
P&L = (816.2p – 795.4p) x £5 per penny stake
P&L = 20.8p x £5 per penny
P&L = £104.00 profit

Financial markets also move down, if the market had moved down to 777.5p – 780.3p, you could choose to close your bet to limit your losses. If that happened, you would sell your trade at 777.5p.

Therefore, with the same £5 per penny stake:

P&L = (closing value of the market – initial value of the market) x stake per penny
P&L = (777.5p – 795.4p) x £5 per penny stake
P&L = -17.9p x £5 per penny
P&L = -£89.50 loss

Selling – Spread Betting on the Market to Go Down

An advantage of using a spread bet is that you can sell the markets.

The initial market was priced at 792.6p – 795.4p.

If you were to go short of Polymetal International at 792.6p and the shares fell then the spread could move to 766.0p – 768.8p. Assuming this was the case, you could close your trade at 768.8p.

P&L = (initial value of the market – closing value of the market) x stake per penny
P&L = (792.6p – 768.8p) x £5 per penny stake
P&L = 23.8p x £5 per penny
P&L = £119.00 profit

Nevertheless, if the market increased to, as an example, 810.3p – 813.1p, you could choose to close your bet to prevent further losses. If so, you would buy at 813.1p.

With the same £5 per penny stake:

P&L = (initial value of the market – closing value of the market) x stake per penny
P&L = (792.6p – 813.1p) x £5 per penny stake
P&L = -20.5p x £5 per penny
P&L = -£102.50 loss

Polymetal International Rolling Daily prices taken as of 11-May-12.

FX Spread Betting: Sterling Rallies as BoE Holds Off Asset Purchases

James — Fri, 11 May 2012 08:44:47 +0000

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.

DAX Spread Betting Index Resilient amid Greek Instability

James — Thu, 10 May 2012 09:00:39 +0000

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.

Online Spread Betting Investors Remain Cautious amid Greek Issues

James — Wed, 09 May 2012 09:30:03 +0000

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.

Index Spread Betting Markets Show Resilience amid Political Uncertainty

James — Tue, 08 May 2012 08:58:35 +0000

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.