CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

A choppy session with concerns over China still weighing on sentiment

Article By: ,  Senior Market Analyst
July 16, 2012 3:40 PM

European markets have struggled for a direction so far on Monday. Resource stocks put pressure on the main indices as concerns over China’s economy weighed on sentiment and banks further added to the downward pressure following comments from European Central Bank President Mario Draghi.

Despite a cautiously positive start, the damp mood quickly took hold and the main European Indices have since lost ground. As a result the CAC has given up 0.4%, the DAX 0.2% and the FTSE is trading 0.1% lower.

After China has reported its 6th consecutive quarterly slowdown in growth last week, The Premier Wen Jiabao failed to sooth sentiment by starting that China’s expected economic rebound has not been as strong as forecast. “It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established,” he warned.

Metal prices dropped following these remarks which translated to a broad sell off in resource stocks. Rangold Resources fell 1.6%, Polymetal International was down 1.71% and heavyweight Rio Tinto dropped 1.2%. Nomura added to the pressure on the sector by cutting its target prices of numerous miners due to lower commodity prices.

Banks were also notable losers following comments from ECB President Mario Draghi who is arguing for senior creditors to be held accountable when a bank goes into liquidation. This would be especially relevant for Spain and would mean that the tax payer would not shoulder the burden but share with the appropriate bond holders. Perhaps in principle a good idea to share the pain, however the bond market is extremely fragile right now and this may prove to be too much. Consequently Barclays was down 2.5% tracing European banks such as Santander, down 3.1% lower.

Security firm G4S is by far the biggest loser today after admitting that it will incur a loss on its Olympic Games contract of £35-£50m after falling short in providing the number of security personnel that it agreed to supply. Despite an apology from the CEO Nick Buckles, the company has received downgrades from both UBS and Jefferies. It is currently down over 9%.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024