Capital Spreads posts positive results

London Capital Group (LCG:AIM) Finals PTP £0.5m (£0.15m) Divi n/a (n/a).

London Capital Group posted a 224.5% increase in pre-tax profits due to rising yet volatile markets attracting profit-hungry punters.

The firm, known for its
Capital Spreads spread betting service,floated on 22 December and maiden results show a pre-tax profit of £550,000 in 2005, compared with £155,000 the previous year.

Aside from the increased bets from its existing clients, CEO Frank Chapman attributed the result to new customers brought in under white-label agreements. London Capital also provides systems and software for other spread/binary betting and forex sites.

The firm already has 13 agreements in place and according to Chapman is in discussions with several other groups. He claims that should any of these prove fruitful, it would have a positive impact on revenues.

Capital Spreads Market Commentary

03/02/2006,
Capital Spreads, Simon Denham

It’s ECB rate decision day today and a hike to 2.5% is almost done and dusted. Trichet has forewarned markets (in line with current central bank policy) of this event and it should not have too much effect. Dealers, though, should be aware of the announcement (12.45 London Time) as markets can become quite volatile over the period.

Markets recovered quite a bit of their losses yesterday as dealers concentrated on the reasonably robust figures from the States and our Clients had one of their best ever days getting heavily long of the FTSE and sitting back for the ride and playing Sterling initially from the long side and then reversing into shorts at the high 1.75′s making money on the way up and then again on the way down!

This morning sees very little activity as we call the FTSE unchanged on the open at 5840-42 with US markets off a little from the close last night. Most of the indices bounced from support levels and although finding it difficult to make new highs they are also find bear moves tough going. Wall Street is called at 11038-42 and the S&P at 1289.4-1289.8. The S&P performed strongly versus the Dow as the latter was held back slightly by GM.

This morning sees figures from Adidas coming in at a loss of some €4m versus expected profit of €5m. The shares may be under pressure this morning as the integration of Reebok into the Adidas stable is proving to be more expensive than forecast. The trading forecast from the company is very bullish and these numbers may be considered a blip as one off exceptionals.

Aviva has come in with much better numbers than analysts forecasts (£1.77 billion vs expected 1.35). The shares have had a wonderful run over the past six months rallying some 180p since October to close last night at 790p. The open this morning is likely to be well up from here and our clients are looking for offers in early markets.

Currencies made there, by now, usual move over US figures. First, selling off the Dollar on expectations of an easier interest rate outlook in the US and then, buying it up on reflection that if American rates are peaking then can others be far away? The Euro still looks solid above 1.1890 and clients continue to buy on any dips current call at 1.1926-28. Sterling sees continued two way business with any moves being opposed by clients as the outlook remains very cloudy. At 1.7502-05 we are very much mid market with both major support and resistance some way off at 1.7330 and 1.7750 respectively. Bulls are pointing to a series of higher lows since November which could indicate a more positive outlook but Bears point out that the moving averages are turning negative once more.

Copper gained heavily yesterday adding to Tuesday’s move putting on a 1,100 point rally from 2.1200 up to 2.2350. Clients are short and the pips are beginning to squeak.

Oil inventories were in line with expectations which caused dealers to all go home (!) a trading range of some 50c for the whole day was not really even trying. This morning sees April Nymex up 40 cents at 62.42-48 on renewed fears over the Middle East, with resistance at around$63.00 there is little to play for in early trading and clients are understandably cautious about opening new positions at these prices.

02/28/2006,
Capital Spreads, Simon Denham

Last night saw the US markets making their usual disappearing act at the end of the day. As commented here several times over the last few months the Dow and S&P have made a habit of drifting lower in the last half hour of trading. Yesterday was particularly disappointing as the S&P had actual managed to claw above the resistance level at 1295.0 and was looking to make a technical close above it. With the fall out we are now back down at 1291.4-1291.8 and chartist are watching closely for evidence of the double top (as mentioned yesterday) which if confirmed may send us back down to 1250.0 and possibly lower.

The FTSE is called down 10 points at 5865-67 in light activity. Clients are mixed here as bulls fight it out with the bears. At these levels it is increasingly difficult to make further headway and 5890 seems to be a top for the time being.

RBS missed analysts targets (just) but the numbers are still very impressive the share price, is likely to open significantly higher this morning early calls for a rise of around 50p. The rumoured interest from Citigroup has driven the share price up to new recent highs anyway and investors must be very happy with the events of recent months.

Party Gaming came in with results just above expectations and the shares are also likely to open slightly higher than yesterdays 130.5 close.

Currency markets remain quite today with the dollar looking solid versus the Euro and Sterling. Sterling continues to gently slip away as forward interest rate expectations remain negative for holders. At 1.7386-89 we are above serious support at 1.7350 but a close below 1.7396 would break a minor support level and may trigger an attack to the down side. On the positive side sellers are finding it difficult to make too much headway at the moment and a holding of these levels may see a sharp rebound into the volume area of 1.7600 to 1.7850.

Oil drifted lower on the lack of any dramatic news and our clients sat on minor short positions with fingers on the trigger in case of further attacks in the Middle East. April Nymex at 60.75-81 is $2.50 off the highs of Friday. The trend is still negative and in an environment where the only positive impetuous is first a warning from the Saudi authorities and then an actual terrorist attack shows that the price will probably continue lower unless something ‘bad’ happens.

Gold had another quiet day with dealers not even attempting a move in either direction. The low $550′s now has a major volume attraction and even breaks away from here will probably be affected by a gravitational pull back again.
Gold at 554.7-555.3.

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