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
✖

FTSE starts higher again marking a third day of gains Central Bank action eyed

Article By: ,  Financial Analyst
July 30, 2012 6:51 PM

The FTSE 100 started the new trading week higher by 66 points or 1.18% on Monday as investors eyed a week where three major Central Banks announce their respective interest rate decisions, which could see more stimulus and further measures announced to combat the eurozone debt crisis engulfing both Italy and Spain.

The FTSE 100 has rallied over 3.5% in the last three trading sessions. 5720 remains an important upside target for the UK Index to break above before it can target the 5900 and 6000 levels respectively. A test at the 5700 level saw the FTSE immediately fall away today and so the 5700-5720 levels are going to be important ones to watch over the next few trading days.

The moves we have seen in the last three trading sessions has been a direct consequence of some of the toughest and most affirmative rhetoric issued by Mario Draghi, the ECB President, Angela Merkel and Francois Hollande to protect the solidarity of the euro. Draghi last week claimed that the ECB would do “whatever it takes to preserve the Euro” and Merkel also claimed alongside Hollande that “we will do anything to protect the Euro.”

Investors have lapped up these claims and the timing of them thrusts the new trading week into greater levels of importance for the near term outlook for European stocks. One cannot ignore the timing of the comments last week. The recent rhetoric has instilled new levels of optimism into the market that the ECB will act this week when it announced its ECB rate decision on Thursday. Whilst another rate cut is not currently expected by the majority of traders, many do want to hear how the ECB plans to cool Spanish and Italian bond yields, prop up bank liquidity and of any plans to give the ESM a banking license.

But agreeing to new measures within the euro camp will be a difficult job, as previous EU Summits testify to, and only Friday did the Bundesbank make clear that it remained against the idea of giving the ESM a banking license.

In this sense, we could see a market that is extremely news driven this week.

First up to the podium of Central Banks this week however is the Federal Reserve, who starts a two day policy meeting tomorrow. The Bank of England announces its own monetary decision on Thursday, where no change is expected.

The start to trading has seen financial stocks lead the way, marking a continuation of the previous 48hrs worth of trading. The FTSE 350 banking sector rose 2%, with shares of Barclays continuing to recover after Fridays better than expected results.

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