BetOnMarkets Market Reports

[Erik]

The FTSE is currently indicating a lower opening, while traders are awaiting the release of the UK Industrial Production number. Analysts are expecting nominal growth of 0.1% for the month of June, which would possibly signal a change for the industry which has contracted almost 2% this year. A number which is stronger then expected will give the FTSE the boost its been lacking in the last few weeks.

Oil took it on the chin yesterday, after traders realized that the threat of the latest hurricane was all talk. Oil is currently sitting on a strong support level at 120.00 dollars per barrel, however if the last few days were any indication, oil will be pressured lower possibly revisiting the 115 dollar mark before more buyers will be found.

 

[Erik]

Traders are buoyant today as one storm (tropical) looks as though it
will miss vital US oil rigs and another storm (economic) might just pass
without reaping total destruction on the global financial system.
European markets led the way today and there has been some welcome
follow on buying from US indices. Banks are amongst the top performers
today with RBS, Barclays and HSBC pushing to their highest levels since
June. Better than expected numbers from scandal hit Societe Generale and
a Government cash injection for Northern Rock have helped push the
sector higher.

Elsewhere, the US service industries index contracted less than expected
and ISM non manufacturing prices retreated to 80.8 from 84.5. This
coupled with oil slipping below $120 has cheered markets as they signal
that inflation may be abating.

Later this evening we have the all important FOMC interest rate
decision. Futures markets are currently pricing in a 93% chance of a no
change verdict and a 7% chance of quarter point rise. For September's
meeting, the futures markets are pricing in a 66% chance of no change
and 32% chance of a raise, while October's futures markets are implying
a 41% chance of a quarter point hike. So while today's meeting is almost
a forgone conclusion, the outcomes of the next couple of meetings are
not so clear cut. Markets are forward looking animals so the excitement
today will come with traders focusing on the possible outcomes for the
September and October meetings. Although a quarter point rate hike in
the next three months seems likely, any sign of this being less likely
than previously expected, or at least a delay in rate hikes and markets
could push even higher into the close. With oil and commodity prices
receding, this may not be out of the question.

 

[Erik]

The FTSE is currently indicating a higher opening as traders are hoping that the 3% gains in the US equities market will translate into gains for the FTSE. While there isnt any economic data out of the UK today, traders are getting themselves positioned ahead of the BOE interest rate decision due on Thursday.

Oil finally broke through the 120 dollar as traders realized that the hurricane is not going to hit any of the oil producing areas in the Gulf of Mexico. Add to this that we are almost finished with the summer driving season, we can see oil dropping below 110 dollars by the end of the month.

BetOnMarkets

 

[Erik]

The FTSE is currently trading flat as traders are looking past Friday and towards the weekend, and who can blame them this has been a long and risk filled week. While there is no economic data out of the UK this morning, it seems like traders are embracing the reversal in the currency market that has been pushing the British Pound lower, making the FTSE an attractive investment to the US investors.

Oil seems to find a nice level of support before the 115$ per barrel mark, in fact some traders are talking about a technical rebound to the 125 level, which is being postponed due to the strength of the US dollar. Most commodities are going to suffer while the US dollar gains strength mainly due to the fact that those commodities are priced in US dollars

BetOnMarkets

 

[Erik]

US equities have followed the Dollar in making a punchy start to the
final trading day of the week. European equities are well off the pace
on worries about the UK housing market and concerns over growth in the
Eurozone, While American stock markets are doing well today, it is the
currency markets that are stealing most of the limelight. The EUR/ USD
pair finally broke below the 1.53/ 1.60 range that it has been trading
within since the Euro's run up in February. The Euro slumped the most in
more than four years against the Dollar, falling to nearly 1.50 for the
first time since February. The GBP/ USD also broke below the 1.93
support level significantly for the first time in 2008 as more bad news
about the UK economy hit the newswires. While a weak Euro has
contributed to the dramatic drop today, the real driver with both these
break outs has been the resurgent Dollar. After being punished for most
of the year, the Dollar index is now heading back up to the levels first
not seen for 7 months. It is unlikely that today's movements this will
dramatically alter the bleak outlook for the global economy, but there
has been a shift in sentiment that says this isn't just an American
problem, the UK and Eurozone are both waste deep with the tide rising.

 

[Erik]

The FTSE is currently indicating a stronger open, as traders are awaiting the release of the UK Producer Price Index, which is the measure of inflation incurred by the UK manufacturers. The repeating issue for why the BOE is not cutting the interest rates is inflation, and if todays number comes out weaker then expected, an interest cut becomes a possibility again.

Commodities took it on the chin last week, as the US dollar steamrolled all the major currencies. Oil, which was one of the losers, is being propped up mainly due to the tension between Russia and Georgia. While a ceasefire has been announced, there is risk for further gains if talks fail. Gold is being pushed along the same lines, as US is backing Georgia in the conflict, and some worry that it might be forced into another war.

 

[Erik]

The FTSE has managed to hold on to most of the morning's gains, which
were largely a factor of the strong close in New York on Friday. A
relatively quiet economic calendar and low summer volume have muted
activity after last week's impressive action. Banking stocks are
performing well in the UK, with Barclays, RBS and Lloyds all putting
further distance between themselves and the July lows. Investors are
impressed that the banking sector has still been able to maintain strong
earnings in the retail sector, despite the ongoing credit problems many
are facing. In the US retail stocks are performing well with online
giant Amazon leading the way.

While the developing conflict is Georgia is grabbing the headlines, so
far both equity and foreign exchange markets remain largely unaffected.
After an early pull back, the Dollar is back to the unchanged mark
against the Euro and Pound while commodities such as oil have barely
moved since the conflict began. While pipelines have been developed
across the Georgia to help connect the energy wealth to the West, they
still only account for around 1% of the global market.

 

[Erik]

The FTSE is currently indicating a week open, are awaiting the very important UK Consumer Price Index. The Bank of England has been struggling for the last few months to maintain a balance between controlling inflation, and trying to jump start a sputtering economy. Todays data will show if the BOEs job will become easier or not. A weak CPI number will result in a very strong open for the FTSE.

Renewed worries about a slowing down economy across the world, has pushed oil prices to a 14 week low. While escalating tension in Russia , traders are worried that a slowdown will lower demand will continue to be the overall theme. We will be looking forward to Wednesdays Department of Energy inventory supplies, which tends to move the market. Gold is nearing 800 dollars for the first time this year, as the strength of the US dollar has forced all those holding gold as a hedge to sell out of their positions, While we feel this is overdone, the recover of the US dollar has began.

 

[Erik]

With the conflict in Georgia seemingly reaching an impasse, financial markets have reacted with the same general disinterest they showed at the start of the conflict. Although the pipeline that crosses Georgia only accounts for around 1% global energy flow, the lack of buying interest in oil is telling. Gold too, is normally seen as a safe haven in times of conflict, but the precious metal is now just $20 or so from being in official bear market territory. The lack of interest in the former 'evil twins of inflation' speaks volumes about the shift in sentiment and attention since financial markets bottomed and oil peaked in July. Before this point, oil was rallying on rumours of supply
shortages or conflicts, but mainly pushing higher on pure momentum alone. This momentum has obviously stalled and buyers, hedge funds especially no longer see the commodity as a one way bet. Still, as it ticks closer down to $100 a barrel, it would be surprising if there was
not a rally of sorts from these levels. There is growing chatter that oil will see a bounce sooner rather than later, especially if it dips to the psychologically important $100 a barrel level.

Financial stocks are mixed in the UK, but energy stocks are pushing higher even without the support of rallying crude prices. The Pound is staking a battering from the Dollar as the US trade deficit unexpectedly shrinks. Although the US housing crisis is showing little sign of abating, the UK housing market continues to lurch from bad headline to dire warning. Sterling is being punished today as a result amid speculation that the Bank of England may not be able to hold its inflation fighting line for as long as it wants.

 

[Erik]

The FTSE is currently indicating a weaker open as traders are waiting for the release of the UK employment numbers. Some analysts are expecting for an increase in the unemployment rate, which will give more reason for the BOE to cut the interest rate at the next meeting. We feel that the unemployment rate will be even worse then expected, and if it happens look for the FTSE to open almost 1% weaker.

Oil broke through the 115 dollar support level, on speculation that a U.S. government report today will show refiners cut output, signalling a drop in demand in the world's largest energy consumer, a build-up in the US inventory could push oil below 110 dollars per barrel. Gold is trading just above the 800 dollar level, and it seems like its going to go lower, as the US dollar is picking up steam against the other currencies. We will not be surprised if gold drops below 800 based on positive US dollar sentiment.