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.

The positive bias remains in light of an ADP figure out from the US earlier that shows companies added 170,000 workers to their payrolls in January, vindicating somewhat the strong buying seen during the first month of the year.

And while the figure falls short of the median forecast of 182,000, it nevertheless illustrates the current strength and recovery of the US economy, and tempers the potential consequences of negative news flows that could be seen from an unstable Eurozone.

Traders note, however, that the current demand for safety remains elevated in spite of a growing appetite for equities; Bunds offer only 1.82% over 10 years, something not at all synonymous with growth.

Market Review by Spreadex.

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.

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.

There were not many Canadian economic statistics to help it along, but the couple that did appear were good enough.

The leading index, an indicator of future likely economic performance, was stronger than expected and retail sales rose by 0.3% in November in line with forecast.

Otherwise the only factor to drive the CAD higher was a continuing confidence among spread trading investors that Euroland would solve its sovereign debt problem and so prevent the world from falling apart.

Although that solution is far from a done deal, as long as market optimism lasts it will support the currencies of Canada and other commodity-exporting countries.

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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.

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It clustered with the NZ dollar, the euro and the Swiss franc to take advantage of a slightly more optimistic attitude among forex spread trading investors, adding three quarters of a cent against the pound.

The data that might have hampered it, but didn’t, included a weak recovery in mortgage lending as well as monthly and annual falls in new motor vehicle sales.

The most surprising figures were those for employment. While the unemployment rate was steady at 5.2%, 29,300 jobs were lost in December, and the November job loss count was revised upwards to 7,500.

Although the numbers were a disappointment, they had only a temporarily negative effect on the Aussie dollar.

It started this week heading higher, but gains could be limited by Thursday’s Australia day holiday – which many financial spread trading investors will be tempted to turn into a four-day weekend.

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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.

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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

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Traders expressed their frustration about the lack of progress within Europe this afternoon with index spread trading markets pulling back from their recent highs.

The IMF also came into the fray, siding with the world banks statement last week. It asked for the Eurozone to break the vicious cycle Europe has got itself into saying that world economic growth is set to be significantly weaker than previously thought.

To top the days trading off, UK debt breached the £1tn mark today with a staggering debt of 64.2% of GDP, causing Gilt yields to rise, if only slightly.

Market Review by Spreadex.

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.

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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.

Even though this was denied by German finance minister Schaeuble, falling yields on Italian and Spanish bonds and optimism that a Greek PSI deal was imminent, kept markets with a predominantly bid bias, sending the FTSE to its highest level since July last year.

The positive sentiment also translated across to more cyclical sectors with the oil and gas sector getting a boost from more positive broker comment and a firmer oil price.

Indian based Essar Energy has continued its recent volatile trading, up near the top of the FTSE 100 as sentiment fluctuates on the outcome of its tax dispute in Gujarat.

British Airways owner is higher as it looks to identify new takeover targets while announcing the launch of a new budget airline Iberia Express on 25th March.

On the downside engineering groups Weir Group and IMI have slid sharply after being hit with broker downgrades.

US spread trading markets opened pretty much unchanged from Friday’s closing levels on the back of the slightly firmer tone in European markets, but have continued to push up ahead of this week’s FOMC and US GDP numbers, due on Friday.

The recent improvement in US economic data has seen optimism rise that this week’s US Q4 GDP numbers will see a revision upwards. Meanwhile the slightly more dovish makeup of the new FOMC committee has raised expectations of a much easier monetary policy outlook in 2012.

Companies in focus today include Halliburton after the energy Services Company reported a rise on Q4 profits, with EPS coming in pretty much on expectations of $0.99c a share.

Blackberry owner Research in Motion is also in focus after the company announced that its co-chief executives were both resigning.

The US dollar has taken a bit of a beating today as financial spread trading investors have shed some of the recent shackles of caution sending commodity currencies pushing higher.

The biggest gainers have been the New Zealand and Australian dollar outperform today ahead of a key week for US economic data.

Some of the recent US dollar gains are being given back ahead of this week’s two day FOMC meeting. Given the change in make-up with respect to this year’s FOMC, which has a distinctly more dovish look than last year’s there is an expectation that policymakers could adopt a much more dovish tone than has been the case of late.

The pound has underperformed relative to its peers ahead of the release of this week’s latest Q4 GDP numbers, which some commentators fear could well post a negative quarter, and the pound has suffered some profit taking as a result.

The weakness in the US dollar amidst speculation about this week’s FOMC has seen gold prices push to their highest levels since the 12th December.

We need to see a close above the $1,675 level to target a move towards $1,700. Support remains around the 200 day MA at $1,643.

Oil prices have remained underpinned by the firmer tone in equity markets as well as reaction to the EU’s announcement of economic sanctions against Iran, from July was met with a predictably hostile response by the Islamist Republic. This comes after Iran once again threatened to close the Straits of Hormuz.

It remains to be seen how the ban would be implemented given that Greece, Italy and Spain are Europe’s biggest importers and have little scope to withstand any oil price shocks.

Orange juice futures continued their recent gains making brand new highs over fears of citrus greening disease and an important ban.

After a strong down day on Friday copper prices have rebounded strongly but have yet to get above their 200 day MA, and the risk remains for lower prices while below this key chart level.

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.

There hasn’t been much economic news today and financial spread trading investors are happy to end the week on a good note rather than a bad one.

In shares spread trading, US Corporate earnings have been generally positive, however Googles results were worse than expected, causing their shares to take quite a considerable hit.

Vodafone received some relief today as it won its legal case in India, escaping a potential 2.9bn tax bill.

Market Review by Spreadex.

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.

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.

Investors stampeded towards commodity currencies and other investments that would, in their opinion, benefit most from a solution to the Euroland sovereign debt crisis. Other than this, there was nothing of particular significance about the trio.

It was the NZD that led the field with GBP/NZD touching a four-month low, USD/NZD touching a two-month low and a record low for EUR/NZD.

Its success owed nothing to any New Zealand economic statistics.

There was only one, November’s building permits, and they were down by -6.4% on the month.

Of considerably greater importance will be this week’s inflation numbers and the quarterly survey of business confidence.

Market FX Review by MoneyCorp.

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.

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.

However, the longevity of today’s rally may be dictated by the success of the US earnings season, which picks up speed today with the release of Citigroup’s Q4 results.

What we have seen is commodity prices lifted by the better than expected reading of Chinese GDP, and this lift has given a correlated support to heavyweight mining and oil shares this morning.

Chinese GDP lifts stocks

Chinese GDP slowed from 9.1% to 8.9% in Q4, which proved better than many had feared, which was a fall to 8.7%.

There remain significant concerns over slowing Chinese growth and the fact that GDP has not slowed quite as quickly as most had expected helps to cool those fears.

What remains less transparent is whether this data will influence Chinese monetary policy, which has changed tact of late to help support slowing growth.

The gains we are seeing across the board for resource stocks may be scuppered should this data change the pace at which the Chinese authorities attempt to stimulate growth, though that potential appears far from the mark at present.

The FTSE 350 mining sector saw gains of 2.3% as a result, and these gains were closely followed by a similar charge higher in financial stocks, with the FTSE 350 banking sector also gaining 2% as spread trading investors’ appetite for risk increases.

ZEW see’s huge jump

The German ZEW figures smashed expectations, coming in at -21.6 which is a marked improvement from -53.8 last time around, especially when most analysts had expected a smaller rise to -50.

Current conditions also beat forecasts, with the measure rising surprisingly to 28.4 from 26.8, when a fall to 24 had been expected.

This is a huge reading, make no mistake, and whilst its important not to get too far ahead of ourselves, it’s hard not to pay attention to the fact that this is the biggest jump in the ZEW for January ever.

More evidence of consistent improvement in this reading will be needed to have a long term impact on investor sentiment.

EUR/USD rallied over 1% on the back of the ZEW figure, giving the single currency some short term relief from its recent 16 month low woes.

A smooth Spanish T-bill auction also brightened the euro’s near term prospects as bargain hunting cemented euro support.

The longevity of today’s euro gains however is less transparent with ongoing deadlock in Athens between Greece and private bondholders amidst the rising prospect of a default.

US earnings season could be a welcome blindside

We are now getting into the main calendar for major US companies reporting, with Citigroup set to announce before the US markets open and this could influence strongly how financial stocks trade into the afternoon session.

Over the next two days, we also have major US firms such as Goldman Sachs, Google, Intel and Morgan Stanley reporting.

The US earnings season could help to provide a welcome blindside for financial spread trading investors from the sovereign debt crisis and the deadlock amongst private bond holders and Greece over bond write downs. Moreover, if we get a strong earnings season, this could give stocks further support.

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.

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

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.

This helped the case for holding risk assets for at least until the end of this week so long as macroeconomic news flows remain compatible.

But today’s strong subscription to short-dated paper shouldn’t come as much of a surprise.

If the ECB is restricted legally from soaking up the debt of struggling debtor sovereign nations, then an obvious alternative is to induce banks with cheap credit.

The new three-year funding programme established by the ECB lent €489bn to 523 banks last month.

Market Review by Spreadex.

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.

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.