Festive cheer in the market seems to be running out as we move towards the end of the first trading week of 2012.

Disappointing Italian and Spanish PMI data more than offset a decent German figure and the Eurozone is looking more and more likely to be heading into another recession.

The Euro was under pressure for most of yesterday as risk was dumped and the US Dollar strengthened.

The theme is continuing this morning as the single currency continues to be sold.

European banks continue to make headlines for the wrong reasons as they park newly created ECB cash back at the central bank rather than lending or investing it in the real economy.

Retail gloom continues to hang over the UK with many of the retailers reporting crucial Christmas figures this week.

Next shares were pummelled after they reported disappointing sales over the festive period and set a gloomy tone as we wait for results from rivals M&S.

John Lewis were a ray of light in the gloom, posting impressive sales growth compared to last year, but most if not all retailers are suggesting that economic conditions remain a real concern and are expecting a challenging year.

The Pound has opened the year in much the same way as it finished the last, namely taking a back seat to the Euro and Dollar with economic fundamentals remaining less of a driver than politics.

Data from the US this week has been mixed, ISM manufacturing and Auto sales both showed growth month-on-month ahead of the consensus estimates but factory orders disappointed coming in on the lower side of estimates.

The CFDs online market is hoping for a clear sign of the economic picture on Friday from the Non-farm payrolls, either showing the recovery continuing or a worsening picture and the prospect of further QE this year.

More likely is that the number shows the US economy to the chugging along slowly, leaving both the Fed and the markets disappointed.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

European markets have drifted higher today with the FTSE 100 lagging behind.

A better than expected Spanish auction saw bond yields drop sharply, while a better than expected German IFO survey saw investors become more positive about a German recovery as we come to the end of Q4.

The DAX, CAC40 and FTSEMib are all up over 2%, while the FTSE has lagged a long way behind, with a rise at the time of writing, below 1%.

This may have more to do with the fact that the other European indices have a much smaller component make-up than the FTSE which benchmarks 100 stocks.

With trading volumes remaining fairly light in pre-Christmas trade it remains hard to imagine that this is anything but a slow news day rally.

The best performers are technology stocks with ARM Holdings once again the subject of takeover speculation.

Temporary power provider Aggreko is also higher after its positive trading statement yesterday, and after Citigroup raised its earnings forecasts by 12%.

Industrials are also performing well with Weir Group, IMI and GKN near the top of the leader board.

The worst performers have been in the pharmaceutical sector slipping back after AstraZenenca and some of its sector peers reported product issues and an evaporating pipeline.

Banks were initially under pressure, especially Royal Bank of Scotland in the wake of the Vickers report, but given that it is trading quite close to multi month lows it soon pared those losses.

Retailers are also trading positively after retail sales figures from the CBI showed a surprise jump in December, to a seven month high, with Kingfisher leading the sector higher.

US CFDs online markets opened significantly higher helped by the more positive tone out of Europe and a sharp rise in November housing starts, as they jumped 9.3% well above expectations of a rise of 1.1%.

Building permits also beat expectations, coming in at 5.7%, well above an expectation of a 1.4% decline.

Stocks in focus include AT&T after deep-sixed its bid for T-Mobile USA, thus incurring a $3bn break fee.

Financials have led the Dow higher with JP Morgan leading the way while Bank of America has recovered back above the $5 mark.

Earnings due out later include Nike with expectations of Q2 EPS of around $0.97c a share, up from last years $0.94c.

Oracle is also expected to see Q2 earnings rise from $0.51c a share last year to $0.57c a share, also after the bell.

The US dollar has dropped across the board today. The New Zealand and Australian dollar gained the most after this morning’s RBA minutes showed that the central bank was slightly less dovish on rates than the market had expected them to be.

Rising crude oil prices have dragged the Norwegian krone and the Canadian dollar higher.

The pound has outperformed after consumer confidence numbers showed an improvement in November. Retail sales from the CBI showed a rebound to their highest levels since May on the back of pre-Christmas discounting.

The single currency has lagged behind despite a better than expected Spanish T-bill auction saw yields more than halve from their previous figure on the six month auction, down from 5.227% to 2.435%.

This is less likely to do with the fact that they are suddenly less risk, and more to do with the fact that the ECB’s new liquidity measures giving buyers of bonds a “carry trade” get out.

Italian bond yields have also slid back.

Crude oil prices have rebounded on the back of the firmer tone in equity markets, while concern about sanctions on Iran continues to underpin any downside.

Gold prices have also pushed back above the $1,600 level on the back of a weaker US dollar looking to test its long term 200 day MA at $1,623.

Silver prices have also rebounded strongly, outperforming gold prices.

Copper prices have regained all of yesterday’s losses pushing higher on the back of a firmer Australian dollar and a weaker US dollar.

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

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

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

Despite the negative news headlines after the close last week, with the ratings warnings from Fitch, and the geopolitical uncertainty out of Asia from early this morning, markets initially managed to broadly recover from their lows.

Trading has remained subdued though, as investors appear to be sitting on the side-lines as pre-Christmas volumes take centre stage.

Banks have been in the spotlight in the wake of an announcement from George Osborne about the implementation of measures to split up the investment and retail parts of UK banks.

Lloyds has been heaviest hit, closely followed by Barclays, while HSBC and Standard Chartered have been hit the least, with talk they may be granted an exemption so the ring fence only relates to its core UK operations and not its global ones.

Other fallers include hedge fund Man Group after being downgraded to “sell” by Deutsche Bank.

The retail sector is once again feeling the pressure after HMV once again saw profits slide, losing £45.7m.

The commodities sector is also weaker with mining and oil and gas sectors lower on the back of geopolitical uncertainty out of Asia.

On the upside more defensive stocks are helping to stem the downside with Imperial Tobacco the best performer.

Also doing well is temporary power provider Aggreko after once again beating analyst expectations. It continues to win contracts all over the world the latest a $100m power contract extension in Bangladesh and is 20% up year to date.

US markets have shown their customary resilience opening higher this morning despite the political concerns in Asia and the concerns about European ratings.

The biggest gainers are defensive stocks with Pfizer and Merck leading the gainers, while financials continue to get hit with Bank of America and JP Morgan leading the fallers.

The US dollar has been somewhat mixed today with the commodity dependant Australian dollar getting hit the hardest as commodity prices slip back.

The single currency has found upside momentum difficult to sustain in the aftermath of Friday’s downgrade of Belgium by Moody’s and Fitch’s decision to put France, Italy and Spain on downgrade watch negative.

Its comments that a solution to the euro crisis remains “beyond reach” has been greeted with some ambivalence.

Today’s meeting of Eurogroup ministers is more likely to highlight the differences between EU nations with respect to the fiscal compact while the subject of bi-lateral loans to the IMF is also likely to create some divisions, with the UK resistant to the idea of paying up an extra €30bn.

ECB President Mario Draghi’s comments to the EU parliament merely served to confirm previous statements made in the last couple of weeks, though he did suggest that CFD trading investors should rely less on ratings agencies for their investment decisions.

There was also no indication that the ECB was considering any form of mass buying of European bonds.

The best performers have been the Norwegian and Swedish Krona, along with the Canadian dollar.

Oil prices continue to be buffeted by the competing forces of concern about European growth as well as rising tension in the Middle East. The price initially made 6 week lows below $102.50 before rebounding sharply.

Copper prices have pulled back from their lows, but still remain slightly softer on the day.

Gold prices have tried to push back above $1,600 but it appears to be struggling to get back above the 200 day MA. Until it does so the risk of further downside remains.

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

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

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

When IMF chief Christine Lagarde stated at Jackson Hole that the world economy was in a “dangerous new phase”, little did she know that her words would turn out to be so prescient in such a short space of time.

Fears that the global economy is tipping back into recession have continued to be borne out by various economic indicators from Asia to the US, with Chinese manufacturing data contracting for the third month in a row.

In Europe the picture isn’t too much better with German manufacturing bordering on stagnant, while broader European manufacturing continues to contract.

The outlook for the European banking system remains highly uncertain. Downgrades for seven Italian banks and uncertainty over the next tranche of the Greek bailout all suggest that the banks could be undercapitalised to the tune of €300bn and that politicians need to act now to avert a crisis.

With central banks running out of bullets to deal with the crisis a number of G20 leaders co-signed a letter to the head of the G20 Nicolas Sarkozy urging European leaders to find a solution to the European debt crisis, as well as urging US leaders to put America’s public finances on a more stable footing.

Given that the main obstacles to expanding or leveraging the European bail-out fund (EFSF) are differences of opinion and political in nature, rather than economic, that could well be a big ask.

Today’s continuation of the G20 meeting and the annual meeting of the IMF will offer leaders the forum to give early indications of progress.

Last night’s statement to commit “to a strong and coordinated international response to address the renewed challenges facing the global economy” was a start. However, given the fragmented framework inherent to Eurozone it is unlikely that politicians will be able to offer anything other than soothing words or that action will be taken.

We shall soon find out in any case, as the euro region in last night’s communiqué pledged to increase the flexibility of the EFSF by the time of the next meeting on October 14-15th. Moreover, ECB member Luc Coene indicated that measures, including a possible rate cut, could well be taken in October if economic data continues to disappoint.

Online CFDs Markets will be analysing the contents of ECB president Trichet’s speech tonight for further clues about that.

In any case the US dollar has benefited the most as in an almost action replay of 2008 commodities and equities sold off hard on growth slowdown fears.

Even gold has slumped as investors rotated capital back into cash to cover losses on trading books, and to cover margin calls.

The only economic data of note today is Italian retail sales for July with expectations of a rise of 0.3%. This won’t assuage concerns about future Italian growth after the Italian government slashed its growth forecasts for 2011 and 2012 in the wake of IMF growth downgrades.

Given that the yields on Italian bonds continue to rise, despite ECB intervention, there is a real fear that if the Greek situation isn’t resolved soon Italy would feel even more heat from the bond markets.

 
EUR/USD CFDs

Yesterday’s sell-off found support at 1.3390 just below the 50% Fibonacci retracement level at 1.3405 of the entire rally off the 1.1880 lows in 2010 to the highs this year at 1.4940.

A sustained break of this level would then target 1.3050 which is the 61.8% retracement of the same move. T

he bounce off this support area could well see a pullback in the medium term towards 1.3670, but the close below 1.3500 the previous lows this month undoubtedly keeps the outlook negative for further declines.

 
GBP/USD CFDs

Yesterday’s break below the 1.5485 50% retracement of the 1.4230/1.6745 up move at 1.5485 shifts the focus definitively towards 1.5190 in the near term despite the bounce off 1.5330 yesterday. The pound could well struggle to rebound much beyond 1.5485 as the downward pressure continues to weigh on sentiment.

 
EUR/GBP CFDs

After initially losing ground in early trade the single currency managed to rebound off support at 0.8700 but again has been unable to move much beyond the recent range highs and last week’s high at 0.8790, however this remains the extent of the rebound thus far.

While below the trend line resistance from the 0.9085 highs at 0.8810 the bias remains for more range trading with an eventual move back towards the lows at 0.8530, and then on towards 0.8450.

 
USD/JPY CFDs

Once again the inability to rally and weak US bond yields keeps the pressure on the US dollar, however the base is just about managing to stay intact for now.

As such the bias remains for the prospects of further gains, on a break above 77.20.

Any move below the key lows at 76.20/30 could well see further US dollar losses towards 74.50.

 
Stock Market CFDs – Market Calls

• FTSE 100 is expected to open 40 points higher at 5,082
• DAX is expected to open 52 points higher at 5,216
• FTSEMib is expected to open 152 points higher at 13,634

CFDs, spread trading and FX are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. It is possible to lose more than your initial investment and you may be required to make further payments. These products may not be suitable for all customers therefore ensure you understand the risks and seek independent advice.

CFDs trading update from Michael Hewson, Market Analyst, CMC Markets.

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

Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

CMC Markets UK Plc which is authorised and regulated in the UK by the Financial Services Authority.

The Bank of England minutes, released today showed that the MPC has not come any closer to raising rates.

The vote as expected showed the split remaining at 6-3, with Spencer Dale & Martin Weale voting for a 25 basis point rise and Andrew Sentance for a 50 point rise.

Data this month has shown the economic recovery stalling somewhat, and the surprise drop inflation (although probably temporary) should be enough to postpone any rise in interest rates.

The Pound is being pushed around by the Euro-Dollar pair, which has rebounded from the lows yesterday after strong earnings from IBM, Intel and Yahoo boosted risk appetite in the Asian session.

Euro data is fairly light today, German PPI for March is the highlight but we do have a Spanish bond auction at 10.30 today. It will be interesting given the backdrop of the increasing probability of Greek restructuring if investors force up Spanish borrowing costs, or the ECB decides to intervene by buying bonds itself.

Overnight we have also had comments from a senior member of German Chancellor Angela Merkel’s CDU party saying he will vote against the ESM, and suggesting there is enough opposition within Germany to vote the legislation down.

The comments seem to have mostly passed under the radar, but are strongly Euro negative and worth watching over the course of the day.

Elsewhere in FX spread trading, one would have expected the S&P downgrading of the US outlook to negative from stable to push up US rates. But there was almost no reaction.

Whether this reflects S&P’s standing in the market post crisis, or the fact that the Fed is the only buyer of Treasuries currently is difficult to assess. But the Dollar has reacted negatively, and may come under further pressure this afternoon if existing home sales data fails to impress.

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Rumours are circulating that the Fed will commence a second period of asset purchases or QE2 as early as November.

The weaker than expected level for US consumer confidence in September published on Tuesday has only supported this feeling as sentiment continues to be hit by job market concerns.

Consequently, the US Dollar remains under pressure, with little sign of stopping. The potential of further US Dollar unravelling as well as interference in many countries to avoid their currencies from strengthening against the USD continues to influence gold prices which hit a new record high, smashing through the $1300 per troy ounce mark.

In the present financial situation it is hard to see gold prices turning much lower, however there will be the usual bounces as profit taking occurs.

The Euro remains a key winner of US Dollar weakness but this currency has issues of its own to deal with. Without a doubt, peripheral debt concerns, particularly concerning Ireland and to a smaller degree Portugal, have increased. Borrowing expenses increasing as the yield on their arrears widens in addition to core Eurozone debt.

The Euro rise will only make it difficult for these countries to make any kind of recovery and could also hurt the established exporting countries of Northern Europe led by Germany. To date however the Euro has displayed some notable buoyancy to renewed peripheral country sovereign debt concerns together with comments by S&P regarding the high costs of saving an Irish Bank.

Conceivably, the awareness that there is a still a vast bailout fund from the EU and IMF on hand if necessary and also the viewpoint that the ECB will add to its buying of Eurozone debt, has provided a buffer for the Euro.

In the future the ECB may be required to join the group in at least trying to talk its currency lower, however at this point the central bank is showing no preference to either talk down the currency or artificially intervene to weaken the single currency. In the interim, EUR/USD is likely to strengthen further in spite of the probable harmful impact on European growth.

Elsewhere in the CFD markets, a currency that may benefit in the wake of potential of Fed QE2 is the Pound. Indecision over whether the BoE will follow the Fed in implementing further quantitative easing could see sterling delay the gains in other currencies against the greenback.

Contradictory comments from MPC members Posen who noted that there might be a requirement for additional QE in the UK to hold up the stumbling economy were opposed by Sentance, who concluded that there was no need for more QE. Sterling Dollar is likely be whipsawed as the debate continues and is set to lose additional ground against the EUR.

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by CurrenciesDirect.com. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

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For any trade you execute on UK Share CFDs on Thursday 6th and Friday 7th May*, we will refund the commission you have paid within 5 working days of you placing the trade.

*up to the notional value of £750,000 on each day. This can be calculated by multiplying CFD trade size by the share price.

1 point spreads on FTSE 100 Index

Usually only on our normal market hours, this has been extended on Friday 7th May, so you can trade 1 point spread on the FTSE 100 Index* from 1am – 9pm, to take advantage of any volatility in the markets as the results are announced.

*includes rolling, daily future spread bets and CFDs (excluding CFDs futures)

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From just 1% on Currencies, 1.5% on Indices and 5% on UK Shares.

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