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August, 2010:

More Mixed and Fragmented Financial Markets?

Aug 31st, 2010
by James White.
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This afternoon markets are fragmented and have the feel of someone lost looking for guidance.

Will the release of the minutes from the last FOMC meeting provide this stability? We’ll know soon enough at 19.00 London.

The day started well with strong Australian retail sales & building approvals data, followed by better than expected Japanese cash earnings.

The European session offered no cheer though with German employment change disappointing and UK net lending to individuals coming in well below estimates.

The North American session has seen the glass swing back to being half full with Canadian GDP coming out in line with estimates and US consumer confidence landing better than expected. The Case-Schiller house price index provided some good news on the US housing market for the first time in months, though as many analysts point out, the data is 2 months behind. Finally, Chicago PMI came in below estimates.

So a lot of data out today – How have markets reacted?

Markets are mixed this afternoon with stock markets managing to drag themselves up from the depths of a disappointing start and actually trade in the black for the day.

Forex markets are fragmented with a few dominant trends.

Swiss franc dominance

Elsewhere in the financial markets, the yen is certainly strong today, but there’s no doubting that the hot money is streaming into the Swiss franc.

The EUR/CHF is down 0.82% to a new record low of 1.2870. The USD/CHF is down 1.16% and the GBP/CHF is down a huge 1.88%.

CFDs, Forex and Financial Spread Trading carry a high level of risk to your capital and can result in losses larger than your initial stake/deposit. These forms of trading may not be suitable for everyone so please ensure you fully understand the risks involved. Where necessary, seek independent financial advice.

Article by Dave Evans, also see Financial Fixed Odds Trading.

This BillionforGovernor.com is only intended for those persons of 18 years of age or older.

Forex CAD and ZAR Trading Update

Aug 26th, 2010
by James White.
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CAD Trading

Lower core inflation weighs on Canadian dollar.

A busy week took the pound up two cents, down four cents and nearly all the way back up to the top again.

The Canadian data offered no compelling reason for investors in the CFDs, forex or financial spread betting markets to buy the Loonie.

Foreign investment in Canadian securities fell by more than 75% in June and outgoing investment fell below zero. Manufacturing shipments went up by 0.1% in June; technically an increase but only just. The figures that hurt the Canadian dollar most were those for CPI inflation in July, which came out on Friday.

Annual headline inflation rose to 1.8% from 1.0%. That was fair enough, but the Bank of Canada forms its monetary policy according to its ‘core’ CPI. That went down from 1.7% to 1.6%, reducing the chance of higher Canadian interest rates in anything like a hurry.

ZAR Trading

Vuvuzelas boost South African retail sales.

A low-key week for South African economic data brought just one helpful statistic. Retail sales went up by 7.4% in real terms in the year to June. It was an improvement on the 4.5% a month earlier.

The football world cup will have had a lot to do with the improvement and good figures are expected in a month’s time for the same reason but that positive effect will fade over time.

The rand performed in line with its peer group, keeping pace with the Australian and New Zealand dollars.

CFDs, Forex and Financial Spread Trading carry a high level of risk to your capital and can result in losses larger than your initial stake/deposit. These forms of trading may not be suitable for everyone so please ensure you fully understand the risks involved. Where necessary, seek independent financial advice.

This BillionforGovernor.com is only intended for those persons of 18 years of age or older.

Economic Data Continues to Point Towards Double-Dip

Aug 25th, 2010
by James White.
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The Markets Last Week:

Last week mergers and acquisitions among natural resources firms were the key drivers of market movements.

KNOC has launched a hostile bid for Dana petroleum, while Vedanta’s move to takeover the Indian arm of Cairn energy has weighed on the miner. Though it retraced to the 220 mark mid-week, it has come back down to 6-month lows, as investors remain unwilling to support the move.

Likewise, BHP Billiton’s $39 billion cash bid for the out-of-favour Potash, an attempt to arbitrage the deflation trade, has further nauseated investors in these choppy conditions, and the share has lost over 9% since the announcement.

Potash is seen desperately seeking new global partners. Other miners remain down amid uncertainty ahead of Australia’s general election.

Macroeconomic data continue to point towards the possibility of a double-dip recession in the states, as the Philadelphia Fed announced Thursday that mid-Atlantic industrial production was down far worse than expected, while US PPI for July was only +0.2%, as expected.

Despite better than expected July retail sales from the UK, sterling remains weak and cable has fallen, with the JPY retaining its ‘safe-haven’ status for the time being.

The Markets This Week:

Next Monday will see Petrofac and Bovis Homes making announcements. Cairn, Antofagasta and Fortune Oil all make interim statements on Tuesday.
Wednesday holds a statement from Tullow Oil and US Durable Goods Orders, and both Petropavlovsk and Salamander Energy report on Thursday. US GDP comes on Friday, with the potential to seriously sway markets.

Article by Spreadex.

CFDs, Forex and Financial Spread Trading carry a high level of risk to your capital and can result in losses larger than your initial stake/deposit. These forms of trading may not be suitable for everyone so please ensure you fully understand the risks involved. Where necessary, seek independent financial advice.

This BillionforGovernor.com is only intended for those persons of 18 years of age or older.

Another Dark Day for the Financial Markets

Aug 12th, 2010
by James White.
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The Morning Market View:

This morning markets are bouncing back after yesterday’s slump. The Dow Jones dropped 2.49%, with further losses coming after hours after Cisco’s earnings missed expectations.

Yesterday the euro fell significantly ahead of other non yen/dollar pairs, possibly linked to the news that the EU had ordered Germany to include nationalised bank’s debt on its balance sheet.

This morning the bounce bank is setting in as it often does after major sell offs. The euro is making inroads into yesterday’s losses, especially against the yen which is bidding higher on central bank talk of currency intervention.

The pound fell less than other currencies so is better placed to recover yesterday’s losses. However, at best the GBP/JPY is just half way through yesterday’s range.

Today’s main announcement for the financial markets is US unemployment claims at 13.30 with a drop expected on last month’s numbers.

The Afternoon Market View from Spreadex:

It’s been another dark day for equities markets, as the majority of Dow components started in the red and UK shares from Barclays to British Airways and BHP Billiton are all suffering losses.

Vedanta seems to have picked the wrong time to acquire the Indian arm of Cairn Energy, and traded more than 100p off its high of 2327 at the open.

Two factors are weighing on the miner—investors don’t see the sense in a miner wandering into the less-than-clear waters of oil exploration, and also feel this environment isn’t conducive to cultivating such growth right now, as macro data continue to show deficiencies in both labour and trade.

It is now well off its 3-month high of 2630 from Monday, and will not be returning to those levels anytime soon. The fall could continue to the mid-July low of 2169; otherwise, support may not come until the 2046 range.

We’re expecting continued selling today, with no other market-moving macro data expected until tomorrow’s CPI and Confidence survey from the US.

Financial Spread Trading

Aug 10th, 2010
by James White.
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It is a simple fact that when trading the financial markets there will be risks whichever trading format you make use of. When share trading, using CFDs or ETFs, you can lose money.

So where can you look if you want an investment option which provides access to thousands of international markets as well as certain tax advantages*?

In the UK, and increasingly across the international community, many think that spread betting offers a realistic solution.

As we have discussed, there are risks when you invest. When speculating you must always remind yourself that the markets can go down as well as up. With spread trading you can lose more than your original stake or investment.

The following risk warning also gives you a couple of other handy pointers, “Spread bets do carry a high level of risk to your capital. Before trading, ensure that spread betting matches your investment objectives. Make sure you familiarize yourself with the risks. Seek independent advice where necessary”.

Small Stakes and Stop Losses

At the same time though, you can put limits on your bets which can help reduce your losses without affecting your potential profits. You can also employ smaller stake sizes such as £1 per point or $1 per point.

To gain a little exposure you could just trade the popular markets such as the Stock Market Indices, ie speculate on whether the FTSE 100, Dax 30, CAC 40, Dow Jones etc will go up or down.

As mentioned, with all of these markets you can trade £1 per point or $1 per point etc. If you speculate on the FTSE 100 to go up, with a £1 per point stake, and it goes up by 60 points then you would make 60 points x £1 per point = £60.

With most spread betting companies you can trade in Sterling, Euros or Dollars. If you want to trade in Dollars then 60 points x $1 per point = $60.

Of course if the market went against you, dropping by say 75 points, then with a £1 stake you would lose 75 points x £1 per point = £75.

That would not be a great start. However, with firms like IG Index you can add a Guaranteed Stop Loss at let’s say, 40 points.

If you were betting on the FTSE 100 it would simply mean that your bet would be closed if the FTSE 100 moved against you by 40 points. Therefore, instead of losing £75, you’d only lose 40 points x £1 per point = £40.

Of course, if you correctly predicted the direction of the market then you would still make a profit of £60 if it moved 60 points or £45 if the FTSE 100 moved 45 points.

Spread Trading Advantages

Risk management is merely one example of the benefits of spread trading.

There are a wide range of markets on offer. You can speculate on thousands of markets from the highly traded FTSE Index and Sterling / Dollar foreign exchange rate, to the less traded Wheat, Dollar / Polish Zloty and Indian Stock Market.

In contrast with more traditional share trading, you can take short positions on a market. Financial spread betting offers you the option of trading in either direction. This means that if your research leads you to think that the price of Gold is going to increase then you can spread bet on it to rise. On the other hand, if you think that the Dax 30 is likely to struggle then you can spread bet on the market to go down.

Given that spread trading does not involve the transfer of assets and is merely a bet it isn’t liable to income tax, stamp duty or capital gains tax*.

In contrast with traditional share trading, you do not pay any broker’s fees or commission based charges.

All this sounds great but what’s the catch? We have already considered the risks with investing. Don’t forget that using smaller stake sizes and applying a Stop Loss can lower your downside.

* According to current UK and Irish tax law. This may change or differ depending on your personal circumstances.

Trading the World Markets

Aug 10th, 2010
by James White.
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With the world economy in recovery mode, many people are still questioning how the markets got so out of control. They are also questioning something a little closer to home; their own finances.

Tax efficiency, opportunities in fluctuating markets, diversifying existing investment portfolios and planning investments for the future are all priorities. Everyone should understand the necessity of planning ahead.

Many are turning away from pure funds and pensions and considering newer forms of trading that provide new opportunities. Spread trading, offers some interesting features and is worth considering as part of your investment strategy.

When speculating though you must always remind yourself that the markets can go down as well as up. With spread betting you can lose more than your original stake or investment.

So Why Financial Spread Trading?

A lot of inconvenience can be prevented by spread betting. This is especially true when it comes to access to World markets and the simplification of tax issues.

There are some useful benefits.

Advantage 1) As spread betting does not involve the transfer of ownership rights and it is simply a bet, it is not liable for stamp duty, income tax or capital gains tax*.

Advantage 2) A key advantage is that spread betting offers a wide variety of financial markets on which you can speculate including commodities, indices, currency and equities markets.

Advantage 3) I like that you can close a profitable trade and bank a profit but also that you can close a losing trade and limit your losses. Being able to part-close a bet also offers an interesting angle, i.e. closing part of your spread bet but keeping the rest of it open. This can be used to help manage your risk.

Advantage 4) Naturally, you can spread bet on markets to go up but you can also spread bet on them to go down.

Advantage 5) The fact that some markets can be traded 24 hours a day sets spread betting apart from more traditional stock trading. Another advantage is that there are a wide variety of ways in which to make trades; spread bets can be made online, over the phone, or even on some new mobile applications.

The Financial Services Authority regulates the UK based companies. This tends to ensure a certain level of service and, more importantly, consumer protection. With regulated online spread betting companies like Financial Spreads you can trade some markets 24 hours a day, including key Currency and Stock Market Index markets. In addition, you can also trade more traditional markets such as Gold, US and UK shares and so on.

So whilst there are many plus points, you also need to remember the potential downside.

Spread bets do carry a high level of risk. Before trading, ensure that spread betting matches your investment objectives. Familiarize yourself with the risks involved. Seek independent advice if necessary.

* According to UK tax law. Tax law can be changed or may differ depending on your personal circumstances.