A brief look at last week and the week ahead, the Weekly Review from IG Index.
Weekly Trading Report 16 August 2010 - Last Week's Trading Highlights
Global markets suffered a tumultuous midweek, with disappointing economic forecasts from the US and UK leading to significant falls.
Both the FTSE and the Dow plunged a shade under 2.5% on Wednesday as banks and miners lost out at home, Barclays and Lloyds both losing over 6%.
After confirming a slowdown in economic recovery, the Federal Reserve announced on Tuesday that it would be maintaining its QE programme by purchasing longer-term government debt.
Initial optimism soon dissolved into global jitters over a possible double-dip recession, and this loss of confidence was compounded on Wednesday as the Bank of England lowered its 2011 UK economic growth forecast from 3.5% to below 3%.
Tuesday’s news of falling house prices and a reduction in high-street spending failed to offer respite and although there was some positivity in the form of the UK’s trade deficit narrowing beyond expectations, this had little effect on markets.
Wednesday’s triple-digit decline in the FTSE was also immune to news from the ONS that unemployment dropped by 49,000 in July to 1.46m, and from the CML that mortgage lending picked up in June.
In Europe, Greece revealed on Thursday that its economy shrank by 1.5% in the second quarter, in stark contrast to Germany, which reported quarterly economic growth of 2.2% on Friday, its fastest rate in over 20 years.
Shares in TUI Travel fell 10% on Tuesday after Europe’s biggest the travel operator revealed a dip in quarterly revenue. Recent troubles in the airline industry were also reflected the next day by Thomas Cook, after the travel agent warned that full-year numbers are likely to come in at the lower end of expectations.
On the high street, baker Greggs said on Wednesday that rising wheat prices, recently recorded at a 22-month high, would make for tougher trading conditions.
More positively, insurance giants Standard Life and Prudential reported improved half-year pre-tax profits of £182m and £845m respectively on Wednesday and Thursday.
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Weekly Trading Report 16 August 2010 - The Week Ahead
Indicators
The US economy will come under renewed focus this week, with Monday’s Empire State survey followed on Thursday by the Philadelphia Fed manufacturing survey.
At home the release of the MPC's August meeting minutes midweek will attract attention, while on Thursday investors will be closely monitoring the UK's public finances and retail sales data.
Company Results and Reports
Half-yearly results from mining blue-chip Eurasian Natural Resources stand out in a quiet week for UK company announcements.
Over the pond, keep a look out for quarterlies from retailers Wal-Mart, Home Depot and Sears among others, as well as figures from information technology giant Hewlett Packard.
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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 16 August 2010', Review by D. Jones, last update: 16-Aug-10
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