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Daily Market Report 10/02/2012

European Shares
Over the past weeks the markets have weathered disappointing news form the Euro-region including downgrades, missed deadlines for financial aid and slowing growth, and despite all that remained strong throughout the new year, indicating that the resolution of the European sovereign has already been priced in. Now that the immediate danger of a Greek default has been averted, the focus will turn to the deep underlying problems that the Eurozone is facing. With that in mind and considering that February is a typically weak month for stocks, we could see the optimism in equities fading away and the main indices reversing their gains. This morning a bit of weakness has greeted the early session with the FTSE 100 opening about 40 points lower a 5860t. At the time of writing the UK blue chip index is up on the day at 5869.
FX
In line with equity markets, the EUR/USD remained unaffected by the Greek announcements trading in neutral movement in the past three sessions. After failing to close above 1.3289, the euro has consolidated in a tight range between 1.3240 and 1.3320. If the price drops below the 1.3240 area we could expect a downtrend movement towards 1.3200. On the other hand, if the price breaks above 1.3240, next target to watch is around 1.3300.

Commodities
Gold is showing signs of weakness this morning but is still hovering around its recent highs above 1700. It looks like the precious metal was heavily supported by the grinding process of getting Greece to agree to the austerity measures and it could now be trapped in a range between 1710 and 1755 in the absence of a fundamental change in sentiment. Brent crude slipped from a six-month high towards 118 to just above 117 this morning after Chinese data showed a soaring trade surplus.
Today’s Calendar
The economic docket today is thin on the ground. Domestic data releases for the UK come in the form of producer price index released at 9.30 am (GMT). Friday’s U.S. economic reports include international trade data at 1:30 pm (GMT) and consumer sentiment at 2.55 pm (GMT)

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