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
✖

Sharp US turnaround leads Europe higher

Article By: ,  Financial Analyst
August 10, 2011 4:15 PM

A sharp turnaround in the US markets last night, where the Dow Jones rallied as much as 6% in the final hour of the trading session, has helped to lock in a positive opening for European stock indices. The FTSE 100 rallied over 1% as a result, whilst the CAC rose 1.7% and the German DAX saw the most gains, trading higher by 2.5% in the first 30 minutes of Wednesday’s session.

What we are seeing right now is a relief rally, energized by bargain hunting and helped by the Fed’s pledge to maintain interest rates at exceptionally low levels until 2013. With the FTSE 100 falling to a 20% low yesterday from its years highs, investors are looking to pick up some of the more badly beaten down stocks on speculation of a short bounce. This is what we have seen so far in tentative stages.

However, trading remains highly volatile and the rallies we have seen have been choppy in nature too, emphasising that traders remain on edge. The FTSE 100 needs to break back above 5400 if we are to be convinced that this relief rally has legs. Given the tension that remains in the market, traders need to be wary of early bouts of profit taking, which is likely to keep rallies choppy.

From a sector perspective it’s the mining and banking stocks that are the energy behind today’s gains in a repeat of yesterday’s session. The mining sector, which up until yesterday’s lows had lost 25% in the last six days trading, rallied over 2.5%, supported by a 2% increase in the price of Copper. Banking stocks also saw gains of 1.5% in early trading mostly on investors bargain hunting.

All eyes will now be on the Bank of England Inflation Report where we are likely to see yet more downward revisions on UK GDP. Traders will how to use this to further gauge the likely path of future interest rate decision by the BOE.

Standard Life results cheered
Investors cheered results from Standard Life, who reported higher than expected profits for the first half of the year.  The firm saw a 44% jump in h1 pre-tax profits to £262m, higher than market expectations of £198m, whilst also raising their dividend by 5% to 4.6p. The results were enough to lift Standard Life’s share prices over 3% on the day.

TUI Travel shares lifted by earnings
Shares in TUI Travel were lifted by 7% in trading on Wednesday after the travel firm reported a 57% jump in half year earnings to £88m and said that it was on track for its full year guidance estimate of around £470m. TUI Travels shares have lost around 40% from January’s highs but have broadly outperformed that of rival Thomas Cook, whose shares have fallen as much as 70% in the same time frame.

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