Share Trading

Investors bought into stocks today bullied by outperforming economic data from the US after ISM manufacturing data unexpectedly rose to 56.3 in August. The market had been expecting a fall in factory activity and the resilience showed in Augusts performance is raising optimism amongst investors that perhaps the ‘double dip’ theme has been over played.

Moreover manufacturing prices surged to 61.5, much higher than the 55.0 expected which could insinuate that demand is gaining in traction. However, new orders continue to come off from Aprils high and this is likely to keep any new optimism in growth that may spin off the back of the ISM number on a leash.

There can be no doubt however that today’s ISM manufacturing data is a welcome surprise and has increased investor appetite for risk. We have seen strong performances across the board in riskier asset classes whilst the defensive assets such as the US Dollar have been sold off. Whether or not this trend could continue remains to be seen with Fridays all important jobs data all on investors’ minds.

It’s the first day of a new month and there is likely to be a degree of fresh position trading from investors which could ultimately be playing a role behind the positivity towards today’s session in the share trading markets. But it is the US ISM data, which blew away most market expectations and provided a second wind to earlier gains that had started to consolidate throughout the afternoon.

In financial spread trading Investors have been in a bullish mood for much of the day, buying into the heavyweight mining and energy stocks. The high demand for miners and energy firms had been helped by stable manufacturing data out of China early this morning which has helped to raise hopes that a slowdown in demand may not be just around the corner. As soon as the US ISM data came out however, stocks got a second wind and we saw a significant increase for risky asset classes, which has helped to drive the three heavyweight sectors, the banks, miners and energy firms even higher on the day.

It’s been a positive last few days trading on the FTSE and other key European Indices. The FTSE 100 has rallied over 5% since the low of 5070 five trading sessions ago which represents a fairly solid bounce back. However, the FTSE 100 needs to break above 5435 and out of its current trading range before investors might feel enticed to build on positions even further.

The above comments from Joshua Raymond, Market Strategist, City Index.

Contracts for differences (CFD) trading and spread trading carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.

City Index is a CFD and spread trading and is authorised and regulated by the Financial Services Authority (no. 113942).

This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument

The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks if you are at all unsure, as well as confirming the legal, tax and accounting characteristics and consequences of any transaction.

The FTSE 100 staged a turnaround in trading in the final few hours of the session after investor concerns over a weakening global economic recovery were calmed by a surprising increase in US consumer confidence data.

US consumer confidence rose to 53.5 in August, much higher than the market had expected and this breeds confidence that the consumer is not close to putting the shutters on the windows just yet, particularly after yesterdays worse than expected personal income data.

I would not expect that today’s better confidence data would significantly brighten prospects for Friday’s Non Farm Payrolls. However, the FTSE 100 did close on the highs of the days which insinuates that buying momentum was strong into the close and this is a positive.

The trading day had started particularly negatively, with the FTSE 100 opening 1% lower tracking weakness in the US last night and Asia this morning as traders continued to fret about the strength of the economic recovery. The worst one day slump in the Nikkei for 3 months locked in a negative start to trading in the UK with risky asset classes such as the banks and the miners the worst hit.

However, the trigger for the day’s turnaround was those better than expected consumer confidence data. The immediate reaction from investors was to buy back into those stocks that had been aggressively sold off earlier in the session and this saw a complete reversal for the miners and the banks, which ended the session in positive territory having been heavy fallers for much of the day. Rio Tinto, Fresnillo and Randgold all traded in the top 5 gainers for FTSE 100 companies whilst Royal Bank of Scotland was the top performing UK bank, closing higher by 2.5%.

Arm Holdings however saw a spurge of stock demand, particularly in the afternoon session, to finish the top riser on the day as investors became bullish that Intel’s $1.7bn deal to buy Infineon’s wireless unit could indicate that the blue chip tech firm could continue require support from ARM chip designs in their mobile phones. The news lifted ARM shares to a new monthly high, closing higher by 8.6%.

The above comments from Joshua Raymond, Market Strategist, City Index.

Contracts for differences (CFD) trading and spread trading carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.

City Index is a CFD and spread trading and is authorised and regulated by the Financial Services Authority (no. 113942).

This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument

The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks if you are at all unsure, as well as confirming the legal, tax and accounting characteristics and consequences of any transaction.

Yesterdays FOMC meeting gave many what they were looking for.

The fed chose to use proceeds from investments in mortgage securities to prop up the economic recovery and buy long term government debt.

The move was not the traditional form of QE that many had expected and is instead being branded as QE-lite.

Initially US share trading markets tumbled on the news but managed to rally wiping out much of the losses.

European markets will have their chance to react to the Fed’s decision this morning but will also have its own data to get stuck into.

UK unemployment numbers will be the major focus for UK investors this morning. Traders will want to see the data showing further signs of recovery in the UK, especially ahead of the inflation report due out a little later.

Standard Life resumes the results season for insurers after a two-day lull at the start of the week. Panmure Gordon is forecasting interim operating profit on a European Embedded Value (EEV) basis of £293m, down 16% year on year.

As with TUI, Thomas Cook suffered as a result of the ash cloud from the eruption of Icelandic volcano and in June its attempts to lure people to far-flung hot spots will have been battling the rival appeal of the FIFA World Cup.

Despite that, JP Morgan Cazenove was expressing cautious optimism last week about the medium term outlook for the package tour operators. However, that was before Tuesday’s profits guidance downgrade from TUI and news that TUI’s UK bookings fell by 2% over the past 12 weeks with the Netherlands also down by 3%.

Share Trading Markets

In the UK spreads markets, ahead of the open we expect to see the FTSE down 6 points at 5,370, the DAX up 31 points at 6,317, and the CAC up by 26 points at 3,757.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

By James Hughes, Analyst, CMC Markets.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument

The material is not a personal recommendation and you should seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks if you are at all unsure, as well as confirming the legal, tax and accounting characteristics and consequences of any transaction.