A brief look at last week and the week ahead, the Weekly Review from IG Index.
Weekly Trading Report 17 May 2010 - Last Week's Trading Highlights
It was another action-packed week for markets as the EU announced a €750 billion rescue package and the UK election drama ended in Britain’s first coalition government since 1945.
The new Conservative-Liberal Democrat government immediately sought to lay out a deficit reduction plan. In presenting the Bank of England’s latest Inflation Report on Wednesday, Mervyn King, having kept interest rates at 0.5% on Monday, hailed the plan as ‘strong and powerful’.
Markets reacted in a positive but cautious fashion overall, the FTSE 100 rose 2% on Wednesday and Thursday, only to pare those gains significantly on Friday, but it was another difficult week for Sterling, losing roughly 2% against the Dollar.
On Monday EU ministers confirmed that €750 billion would be available to prevent contagion from the Greek debt crisis spreading throughout Europe. In reaction, the FTSE 100 gained 264 points (+5.2%) on Monday alone.
The Euro also soared initially on Monday, but pared its early rally almost immediately. By Friday, the Euro had fallen below $1.25 for the first time since March 2009, suggesting debt crisis fears are not wholly allayed just yet, despite Spain announcing severe budget cuts on Wednesday. The 27 EU economies posted weak combined first-quarter growth on Wednesday, up just 0.2% on the previous quarter.
UK banks were good as gold on Monday, after the announcement of the EU deal, with Barclays leading the way, up a massive 16.2%.
Companies reported mixed results: on Tuesday TUI Travel and easyJet reported first-half losses, with the former estimating the cost of the ash disruption to be £90 million.
Later in the week though, Sainsbury’s and BT announced encouraging full-year numbers, with the telecoms giant turning a £244 million loss a year earlier into £1 billion profit.
Meanwhile Tuesday’s official data showed UK industrial output rose by 2% month-on-month in March, the biggest monthly gain since 2002 and well above consensus estimates.
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Weekly Trading Report 17 May 2010 - The Week Ahead
Indicators
The economic week at home really kicks off on Tuesday with much focus on the latest inflation data. Investors will want to see whether the UK’s official rate has slowed from the previous month’s bigger-than-expected 3.4% rise, well above the Bank of England’s 2% target.
On Wednesday both the UK and US central banks release minutes from their latest rate-setting meetings, with both continuing to keep rates at their respective record lows in the face of continued economic uncertainty. Meanwhile David Cameron and co will be keenly awaiting Friday’s latest release of the UK’s public finances.
Company Results and Reports
It’s a busy few days of economic releases for the UK, with full-year announcements from blue-chips including Vodafone, SABMiller and British Airways.
BA’s figures on Friday will be particularly keenly awaited since its release coincides with the first of four planned five-day cabin crew strikes, due to start on Tuesday.
Across the Atlantic, look out for quarterlies from Dow components Home Depot, Hewlett Packard and Wal-Mart which are all expected on Tuesday.
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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 17 May 2010', Review by D. Jones, last update: 17-May-10
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