Global equities continued to rise this afternoon, on hopes of progress towards a solution for the eurozone's debt crisis. US data further boosted risk appetite as retail sales gave the economic recovery some momentum.
By 4pm (London time), the FTSE 100 was 1.36% higher at 5476.93, while the FTSE 250 was up 1.05% at 10,338.41. In New York, the S&P 500 jumped 1.08% to 1216.62, while the Dow was 0.86% higher at 11,577.20.
Eurozone crisis dominates G20 talks
Finance ministers and central bank leaders meet in Paris today for the G20 meeting, where markets speculate that the eurozone debt crisis is likely to be the main topic of discussion.
Leaders will likely outline a rescue plan that may include deeper investor losses on Greek bonds, higher bank capital levels, and increased firepower for bailouts funds and the International Monetary Fund. Emphasizing the need for immediate action was yesterday’s downgrade of Spain’s credit rating by ratings agency Standard & Poor’s.
G20 reports today revealed that emerging market countries, such as China and Brazil, are considering increasing IMF lending resources to help stem Europe’s woes. Though talks are still in the preliminary stages, additional funds could be used to help shelter Italy and Spain.
However, the IMF may need a capital injection of around $350 billion to give it more firepower to a global fight economic crisis.
US consumers go shopping
In US shares spread betting, US retail sales rebounded in September at their fastest pace in seven months, as consumers shook off some of their concerns over the possibility of a double-dip recession and the deteriorating global economy.
Sales rose 1.1% from a month earlier, which were boosted by strong auto purchases, while sales growth during August was revised upward to 0.3% after original data said that sales had stalled. Excluding autos, sales increased 0.6% in September, above forecasts for a 0.3 percent gain, while sales of motor vehicles and parts rose 3.6%.
With consumer spending accounting for almost two thirds of US economic activity, the increase suggests that growth at the end of the third quarter might have been stronger than previously thought. Despite a modest rebound in consumer confidence in September, a separate report released this afternoon showed that the preliminary reading for October saw consumer sentiment fall.
The Reuters/Michigan consumer sentiment index for October came in at 57.5, compared to a forecast of 61, and a reading of 59.4 in September.
The Week Ahead
The economic data calendar for the US was relatively subdued this week. However, for the spread betting markets, next week will prove to be quite different, with every day seeing the release of influential figures. It starts off quietly on Monday, with the US releasing industrial production and capacity utilisation figures.
On Tuesday, Europe will release preliminary economic sentiment indices, while the UK and US will digest inflation data.
The east, however, will see Chinese GDP figures for the third quarter, which will likely be paid close attention to by the global markets.
Midweek, the UK will release the minutes from the Bank of England’s latest policy meeting. These should be interesting as UK spread betting investors will be able to take in the reason behind the additional £75 billion worth of asset purchases announced last week.
In addition, the US will release further inflation figures. Thursday will be eventful, with retail sales from the UK, inflation data from Germany and manufacturing and housing figures from the US.
Ending the week, markets will digest German economic sentiment readings, as well as preparing for the EU summit, which will take place on Sunday 23 October.
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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'US Shares Spread Betting: Retail Sales Rise as Consumer Confidence Returns', Article by IG Index, last update: 14-Oct-11
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