A brief look at last week and the week ahead, the Weekly Review from IG Index.
Weekly Trading Report 10 May 2010 - Last Week's Trading Highlights
During a truncated week, with UK markets closed on Bank Holiday Monday, equities tumbled as fears over bad debt in Europe escalated.
Economic strife turned to civil unrest in Athens on Wednesday as protestors clashed with authorities over planned austerity measures, denting confidence on European bourses.
The situation was aggravated further on Thursday, when credit ratings agency Moody’s suggested that banks across Europe faced ‘very real, common threats’ if national governments were not willing to cover bad debts. One bit of positive news for the sector, however, was UBS’s £1.3 billion first-quarter profit.
Given the markedly bearish tone this week, it is perhaps not surprising that volatility was high, with the FTSE losing 142 points (-2.6%) on Tuesday. Meanwhile the Dow Jones shed 225 points on the same day and a further 347 points (-3.2%) on Thursday, although a huge 1000-point intraday tumble was blamed on trader error.
Debt contagion fears also affected the Euro; the single currency dropped to $1.2954 against the US Dollar on Wednesday, a 13-month low. Sterling was also in the line of fire as the UK election failed to produce a clear winner, dropping more than three cents against the Dollar to $1.4633.
UK businesses reported downbeat data, as Morrisons saw its sales growth slow to 0.8% in the 13 weeks to May 2, in stark contrast to the 6% rate it managed in the year to the end of January.
The UK’s second-largest fashion retailer Next sounded an ambivalent note, announcing projected full-year profit towards the upper-end of expectations but warning of tougher economic conditions.
Beleaguered British oil giant BP saw its share price hit a seven-month low of 550.6p on Tuesday as concerns mounted over the extent of the oil spill in the Gulf of Mexico.
There was some respite for markets on Friday, after US Non-farm payrolls showed a 290,000 jobs increase in April, smashing expectations of a 200,000 increase.
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Weekly Trading Report 10 May 2010 - The Week Ahead
Indicators
The UK general election means May’s Bank of England meeting straddles the weekend, resulting in an interest rate announcement at noon on Monday.
With a hung parliament and crashing markets as the backdrop, UK production, labour market and trade balance data on Tuesday, Wednesday and Thursday will also need to be closely monitored.
Company Results and Reports
The impact of the ash cloud dispersed across northern Europe will be partly exposed when TUI Travel reports on Tuesday, and reinforced when Thomas Cook do the same on Thursday.
The effect on airlines is likely to be worse, however, and easyJet’s half-year figures on Tuesday may reveal just how much so.
Across the Atlantic, April’s flurry of earnings activity has more-or-less ended, but watch out for Walt Disney’s numbers on Tuesday to see how Mickey Mouse and pals have fared in the second quarter.
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For previous weeks see below.
Note - 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 Betting 10 May 2010', Review by D. Jones, last update: 10-May-10
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