A brief look at last week and the week ahead, the Weekly Review from IG Index.
Weekly Trading Report 4 May 2010 - Last Week's Trading Highlights
In one of the most volatile weeks for some time, financial markets plummeted midweek after the focus intensified on debt-riddled eurozone countries and the potential Lehman Brothers doomsday style scenario which could follow.
Greece was placed firmly back on the agenda on Tuesday, after ratings agency Standard & Poor downgraded its sovereign credit rating to ‘junk’ status, with Portugal then relegated two rungs to A-. Worse was to follow on Wednesday.
German chancellor Angela Merkel met IMF and ECB leaders and confirmed her commitment to rescuing Athens in a bail-out package which could total €120 billion – far more the €45 billion aid deal mooted. The same day, Spain became the third eurozone nation hit by a credit-rating downgrade.
This latest wave of panic saw the FTSE spread slide 150 points (-2.6%) to 5603.52 on Tuesday, while the Dow Jones spread fell 213 points (-1.9%) to 10991.91.
Unsurprisingly UK banking stocks took the brunt of investors’ fears at home, though the sector did regain some of its losses on Thursday.
The euro also recovered some ground against the dollar, rising to $1.327 after EU confirmation that Greece rescue talks were nearing a successful end – helping Greece’s ten-year bond yields fall from 9.8% to 8.9% on Thursday.
The US markets led a global comeback, with the Dow regaining 1.1% on Thursday to surge back above 11,000. The Fed’s midweek announcement that it would keep interest rates on hold for an ‘extended period’ helped soothe frayed nerves.
Also proving a much needed fillip for investors were a string of strong results on both sides of the Atlantic. On Tuesday Lloyds confirmed it had returned to profit, while on Friday Barclays also revealed a 47% jump in quarterly pre-tax profit from a year earlier.
Meanwhile oil giants BP and Shell announced large three-month profit hikes on the back of rising oil prices, which climbed from $41 to $76 a barrel on average over the first quarter in 2010.
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Weekly Trading Report 4 May 2010 - The Week Ahead
Indicators
On Thursday the UK electorate go to the polls and you can expect investors to be closely monitoring the outcome for a clue as to the future of sterling and the wider economy.
Out the same day is the latest ECB interest-rate announcement, while on Friday look out for the release of those all important US non-farm payrolls.
Company Results and Reports
Heavyweight miners Antofagasta and Vedanta will be the focus of attention when they report full-year figures on Wednesday and Thursday respectively.
Notable half-year results come from blue-chips Sage Group and beverages giant Diageo.
The frenzy that is the US reporting season is starting to run out of steam, but companies reporting quarterlies include Mastercard and Kraft – a company that has enjoyed plenty of media attention recently.
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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 4 May 2010', Review by D. Jones, last update: 4-May-10
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