Weekly Trading Report 18 October 2010 - Last Week's Trading Highlights
The financial spread betting markets on both sides of the Atlantic had a generally positive week, with both the FTSE and Dow hitting highs above the 5700 and 11,000 levels respectively.
The FTSE closed at 5747.35 on Wednesday, its highest peak since April, while the Dow climbed steadily, briefly breaching 11,100 on Thursday, also setting a new five-month benchmark.
A major catalyst for this rise was the publication of the Fed's September meeting minutes, which showed that members felt further quantitative easing would significantly benefit the US economy.
The QE speculation saw the dollar continue its slide, in particular against the yen, where it reached a fresh 15-year low of 81.12 yen on Thursday.
Further bullish sentiment was provided by better-than-expected third-quarter reports from bellwethers JP Morgan, Intel and Google. They posted year-on-year net profits of $4.42 billion, $2.96 billion and $2.17 billion respectively.
All three companies comfortably beat forecasts, fuelling investor optimism from Wall Street to London. In the UK, results were more varied with WH Smith and Punch Taverns announcing contrasting full-year numbers.
WH Smith's 9% pre-tax profit rise of £89 million came in ahead of expectations, while Punch Taverns reported a pre-tax loss of £159 million, alongside plans to sell another 1300 pubs.
Despite the FTSE's strong gains, the outlook for long term economic growth at home remained cautious. Inflation expectations showed little signs of easing, as the consumer price index remained pegged at 3.1% in September, staying well above the Bank of England's 2% target.
Meanwhile, a BCC survey on Tuesday predicted that economic growth in the third quarter would be ‘considerably’ slower than the 1.2% reported for the second quarter, putting the BoE in a tight spot regarding further monetary stimulus. On the positive side, ONS data midweek confirmed that the UK unemployment rate fell 0.1% to 7.7% for the three months ending in August.
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Weekly Trading Report 18 October 2010 - The Week Ahead
Indicators
In a busy week all round, analysts will be closely watching the latest industrial production data from the US on Monday, for the latest take on the health of the US economy. Further insight will be gained on Wednesday with the release of the Fed's influential Beige Book.
At home September's public finance figures on Wednesday, and retail sales data the following day, are likely to provide the focus of attention.
Company Results and Reports
The US reporting season swings into top gear this week, with Apple and Citigroup kick-starting proceedings on Monday. Other banking giants unveiling quarterlies through the week include Bank of America, Goldman Sachs and Morgan Stanley.
Investors will also be keeping a close eye on updates from the likes of eBay and Amazon on Wednesday and Thursday respectively. In the UK, look out for Argos and Homebase owner Home Retail Group's half-year figures midweek, and full-year numbers from Debenhams and Clinton Cards on Thursday and Friday respectively.
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Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
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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 18 October 2010', Review by D. Jones, last update: 18-Oct-10
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