Share Trading

Another positive day on European markets has seen equities hit 6 month highs largely as a result of a blowout number for January employment data out of the US.

January non-farm payrolls confounded market expectations, coming in at 243k, 103k above market consensus of 140k, while the unemployment rate declined again to 8.3%, its lowest level since February 2009.

It makes the recent caution displayed by the Fed Chairman Bernanke about the state of the US economy all the more puzzling for investors.

Nevertheless markets liked what they saw and sent blue chips sharply higher.

The FTSE 100 spread trading market blasted through the 5,800 level to post its highest level since August last year as markets seized on the numbers as evidence that the US recovery remains on track.

The biggest gainers have been in the telecommunications and financial sectors.

Lloyds and Barclays are the pick amongst the banks while telecom giant BT Group saw profits rise 18% for the quarter.

The best individual performer has been insurance group Admiral after it announced it was extending its reinsurance agreements with several foreign reinsurers until 2014.

The party poopers for the day have been in the oil and gas sector with Petrofac lower along with Royal Dutch Shell as investors mulled over yesterday’s disappointing results.

Gold miner Randgold Resources has also slid back in line with a weaker gold price.

US shares spread trading markets surged on the open in the wake of this afternoon’s better than expected January payrolls report, led higher by financials with Bank of America jumping sharply while Caterpillar also outperformed.

The positive sentiment was also carried forward with January Non-manufacturing ISM beating expectations of 53.2, coming in at 56.8.

These better than expected numbers suggest that market expectations of Q1 growth in the US could well get revised higher.

The US dollar has been somewhat mixed today, suffering against the Australian dollar after Chinese services PMI though showing a little weakness due to the Chinese New Year holiday, still managed to show expansion.

The Japanese yen has slipped back sharply on the back of this afternoon’s US data as capital flows back into the dollar as this afternoon’s data makes QE3 much less likely in the short term.

As a result, the single currency has also slid back, on talk that the meeting of Eurogroup finance ministers scheduled for Monday has been put back due to continued divisions about how to close the €15bn funding gap on the next Greek bailout.

Talk of the Greek PM threatening to resign sent the single currency lower while the Dutch PM insisted that the shortfall would have to come from further reforms and pay cuts.

Gold prices have slid sharply on this afternoon’s economic data out of the US as speculation about further Fed easing gets pushed into the background.

Silver prices have followed suit as the US dollar has rebounded on the better economic data.

Oil prices, on the other hand have benefitted from the better economic data seen out today pushing back towards the recent range highs for Brent, above $114, while tension in the region limits the downside, on speculation about Israeli intervention.

US crude prices have also bounced back but still remain near the bottom end of their recent ranges due to the surplus in stockpiles at Cushing.

Not surprisingly given the robust economic data seen this afternoon copper prices have jumped sharply as speculation rises that the US economy is on the mend and the economic data will continue to improve.

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 Micheal Hewson, 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.

Equity markets have had a more positive bias today, however caution remains about the overall outlook in the face of the situation in Europe, with markets slipping from their highs in the afternoon session.

Successful T-bill auctions from Spain and Greece has prompted some buying ahead of the last Fed meeting of 2011, with some expectations that the Fed could extend its low rate vow through until mid-2013. While this may not happen soon it sends a message that policy could remain accommodative for even longer than previously speculated.

The oil and gas sector has led the gains today on the back of some positive broker notes on oil prices, due to fears over supply disruptions.

This has seen BG Group, BP and Royal Dutch Shell push higher while oil services have also rebounded with Petrofac leading the gainers.

Mining stocks have also bounced back after reports that Australia upped its export forecasts for next year on coal, copper, iron ore and gold.

On the downside Whitbread is the biggest faller after reporting that sales growth slowed in the third quarter at its Costa Coffee shops and Premier Inn chain of hotels. Fashion retailer Burberry is also underperforming.

US markets opened higher this morning despite US retail sales missing sharply to the downside, coming in at 0.2%, well below market expectations of a rise of 0.6% and going against speculation of a black Friday bounce.

Earnings news was also disappointing with electrical retailer Best Buy reporting that Q3 profit fell 13% expectations was for EPS of $0.51c however they only came in at $0.42c share.

Rumours in the afternoon of Iranian military exercises in the Straits of Hormuz sent oil prices higher and with that, oil shares as Chevron led the gainers, followed by ExxonMobil. Financials have also bounced back with Bank of America leading the way.

The US dollar has slipped back today finding it difficult to break above the triple resistance against a basket of currencies which currently sits at 79.85.

The main gainer has been the Australian dollar on the back of that report out of Australia about increased export forecasts, dragging the Kiwi along in its wake.

Slightly softer bond yields in Europe saw the single currency initially find some support today after Spain, Greece and the EFSF managed to raise money by way of T-Bills. This was soon undone on a report that Angela Merkel had blocked any increase in upper limit on the new bailout fund (ESM), from the current €500bn ceiling, hitting. This sent the euro spread trading market to its January lows.

The pound has managed to stay fairly steady after inflation numbers came in as expected suggesting that inflationary pressures may be starting to ease.

Countering that the Bank’s chief economist Spencer Dale suggested inflation may stay stickier than anticipated as we head in to 2012, saying he needed to be convinced that inflation was on a downward path before committing to more QE in the New Year.

Oil prices jumped sharply in the afternoon session on reports of Iranian military exercises in the Straits of Hormuz, which was later denied by an Iranian Foreign Ministry spokesman, while vague talk of QE hints also helped underpin prices.

Copper prices have pulled back some ground on the back of the increased export forecasts out of Australia.

Gold prices have rebounded from seven week lows as the US dollar has weakened today, however the fact that it closed below the 144 day MA for the first time since January 2009, suggests that we could see further weakness in the short term towards $1,618 and the 200 day MA.

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 Micheal Hewson, 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.

European markets have dropped sharply today in the wake of the fudge that was last week’s euro summit.

Despite the noise surrounding the perceived isolation of the UK, this remains a sideshow to the overall problem as European leaders continue to berate the doctor, while neglecting to deal with the underlying symptoms of the debt crisis.

Ratings agency Moody’s also weighed into the debate by warning that it would review its ratings on all EU nations in the first quarter of 2012, while markets wait nervously for an update from S&P after their threat last week to revisit the ratings question after the summit.

The determination of EU leaders to enforce even more austerity by way of the fiscal compact will have an even more cancerous effect on growth in Europe and exacerbate the already weak outlook for Europe into 2012.

The biggest losers are not unexpectedly the cyclical basic resource stocks of the miners as investors start to price in a prolonged recession in Europe, while Eurasian Natural Resources is down on alleged reports of corruption at one of its Kazakh subsidiaries.

Financials are also getting hit hard with Lloyds Banking Group and Royal Bank of Scotland both lower. The FSA report on the collapse of RBS didn’t really shed any new light on the failings that caused the bank to be bailed out with the main criticisms being of the fragmented regulatory regime in place at the time.

On the plus side defensives are popular again with tobacco, utilities and health care stocks pushing higher. GlaxoSmithKline is the lead gainer, while BAT and Imperial Tobacco are also higher.

In the absence of any market data ahead of tomorrow’s last FOMC meeting of the year US markets took their cues from Europe, opening lower as concerns about Europe prompt investors to adopt a safety first mentality.

Financials bore the brunt once again with Bank of America and JP Morgan lower while the biggest faller has been chipmaker Intel after posting a profits warning for Q4, cutting its revenue guidance due to hard disk supply shortages.

The US dollar is the biggest gainer today as markets go into risk off mode with the Scandinavian and commodity currencies bearing the brunt of most of the losses.

The single currency has also slid back with the euro hitting its lowest levels against the pound since early March, while against the US dollar it is testing back towards its November lows.

Italy did manage to sell €7bn of 1 year bills at 5.95% with a bid to cover ratio of 1.925, just below the previous 6.087% which on the face of it looks good, however it overlooks the fact that Italian bond yields were much higher at the previous auction, and have since slid back.

The pound has performed fairly well despite the political fallout from David Cameron’s veto, suggesting markets are sanguine about the UK being adversely affected by last week’s events.

The gold spread trading market has been clobbered today revisiting its November lows, causing some concern to gold bulls as it pushes to its lowest levels since October, while silver has also fallen back sharply.

Moody’s statement that they would be reviewing the ratings of all EU nations on Q1 of 2012 has sent oil prices sharply lower today as worry that the tightening of budget rules, will ultimately weigh down any European recovery for the foreseeable future.

Copper prices have also dropped after industrial production data in China suggested that output was slowing down sharply, as it grew at its slowest pace since August 2009, while concerns about growth in Europe are also weighing on the price.

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 Micheal Hewson, 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.

Markets have once again had a positive tone today taking their cues from Europe as they look to post significant weekly gains on optimism that next week’s EU Summit will set the scene for significant progress in drawing up a workable solution to the problems in Europe, after Merkozy’s speeches in the last 24 hours.

This week’s gains have also been helped by the central bank intervention two days ago which appears to have bought some time for politicians to work towards a consensus.

Numerous obstacles remain with resistance about budget oversights already building, but for now, as European bond yields retreat, the pressure that markets were under earlier this week has subsided.

Financials have continued to pull back ground with Barclays, Lloyds and Royal Bank of Scotland leading the way posting gains in excess of 5%. Basic resource stocks have also performed well with BHP Billiton and Vedanta leading the way.

On the downside more defensive sectors have slipped back with utilities like Scottish and Southern Energy and Severn Trent amongst the biggest losers.

Admiral Insurance’s woes continue following their sharp falls in November after the company was downgraded by Investec Securities.

US spread trading markets surged higher on the open despite a rather mixed payrolls report showed that unemployment dropped sharply from 9% to 8.6%, however the actual payrolls number was less than expected at 120k.

The fall in the unemployment rate is slightly misleading given that the fall was largely as a result of people dropping out of the figures, which distorts the figures.

The main gainers were the usual suspects of financials with Bank of America and JP Morgan leading the gainers, with Alcoa also higher as commodity prices rally.

Blackberry owner Research in Motion is also in focus after admitting that it wouldn’t meet its targets for its Playbook tablet.

In M&A news Verizon is buying Spectrum from Comcast for $3.6bn in order to boost its ability to accommodate consumers who increasingly use mobile devices to watch video and browse the Web, and boost bandwidth capacity.

The main gainer today has been the Norwegian Krona, with the currency benefiting from the tension in Iran, and the firmness in the oil price, given that Norway exports all of its oil.

The major currencies on the other hand have trod water, with the single currency struggling to get much above 1.3540 and the pound struggling above 1.5720, against the US dollar. If the single currency closes above 1.3500 then this could signal a reversal which could open up a short term move to 1.3800.

This morning’s UK construction PMI was mildly positive, coming in at 52, slightly below expectations, but companies reported greater optimism that activity would increase over the next twelve months.

Gold prices have tried to push higher today but failed to get above trend line resistance at $1,761 from the $1,920 highs in September.

Copper prices have played follow the money today, on the basis that cheaper money will help boost growth in emerging and mature markets, however they have struggled to sustain much in the way of gains above three week highs at $3.63.

Crude oil prices on the other hand have underperformed after US payroll numbers disappointed with US prices slipping back to the lows of the day, while Brent prices did slightly better on the back of tensions surrounding Iran.

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 Micheal Hewson, 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.

Despite concerns about the US and France’s credit rating European share trading markets have been a bit of a mixed bag, trading between positive and negative territory throughout the day with concerns about Europe tempering upward momentum in the short term, ahead of a key meeting of European finance ministers.

Italy managed to get away €8bn worth of bonds of varying maturities but the rates charged were at euro lifetime highs, with relief that the auction didn’t fail helping underpin markets.

The main gainers have been the more defensive sectors after yesterday’s strong rally with Telecoms and Healthcare sectors leading the gains.

Also amongst the gainers have been companies that have seen sharp losses in the past few days. Man Group has pulled back from multi year lows; while gold miner Randgold Resources has pulled back some of its sharp losses from yesterday. GKN has also been underpinned by renewed bid speculation.

The biggest losers have been yesterday’s biggest gainers among the basic resource and financial sectors, with Lloyds Banking Group and Royal Bank of Scotland giving back some of yesterdays gains along with miners Rio Tinto and Anglo American.

US markets opened higher this morning despite the warning from Fitch last night about the US credit rating. News that American Airlines holding company AMR has filed for Chapter 11 bankruptcy hasn’t been enough to undermine markets too much.

In earnings news jewellery chain Tiffany’s reported Q3 profits up by 63%, boosted by sales in Asia. Income came in at $0.70c a share, above expectations of $0.61c, however the firm revised its Q4 outlook down, despite recent improvements in the key holiday season.

Sentiment was boosted after US consumer confidence for November jumped sharply rebounding sharply to 56 after October’s surprise plunge to 39.8.

The US dollar has once again underperformed today on the back of the firmer tone in equity markets. Last night’s decision by Fitch to upgrade Australia to a triple “A” has seen the Australian dollar pop higher and it is the main gainer on the day

However, given the country’s reliance on commodity prices, a global slowdown could suggest that the rebound is slightly overdone. The New Zealand dollar has followed in its wake.

The pound has shrugged off a rather gloomy Autumn Statement by the Chancellor, as he resisted the temptation to row back on his fiscal plan, while the high yields, (above 7%) on this morning’s Italian bond auction, helped it gain against the euro.

The single currency has struggled despite briefly popping above 1.3420, slipping back down again in the afternoon in the absence of any positive headlines coming out of Europe as well as the revelation that the ECB was unable to fully sterilise all of its bond purchases.

While the amount in question was only around €10bn, it prompted some speculation about monetisation. Reports that Angela Merkel remained adamant in her opposition to Eurobonds didn’t help either.

Oil prices have jumped sharply after this afternoon’s news from Iran of the British embassy being stormed and hostages being taken, while the jump in US consumer confidence also helped.

Gold prices have continued to remain underpinned as they hold above the 55 day MA with a likelihood of further gains while above the $1,680 area.

Silver prices on the other hand are struggling below their 55 day MA which currently sits at $33.35.

Copper prices have remained somewhat becalmed, although slightly higher on better than expected US consumer confidence numbers.

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 Micheal Hewson, 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.