Punters go short of Dow on rally, and long of dollar

Spread betting traders have been trying to oppose today’s strong up-move in the major stock markets, with the Dow a particular focus for the bears.

This stance by punters appears to reflect a view that today’s surge of nearly 100 points in the FTSE is mainly due to merger and acquisition activity and therefore may not last.

Bookmakers said that their clients had been long of the FTSE from around the 5150 level last week, but when the strength of today’s rally became obvious, traders either decided to take profits on longs, or to open outright short positons.

Finspreads said that its clients were short the Dow and the S&P, in particular, this afternoon. They were long of the Nasdaq however.

On individual shares, Finspreads said that punters had been net long of mobile phone firm O2 for many days ahead of this morning’s announcement of a takeover by Telefonica of Spain.

IG Index reported client buying of the dollar against both the euro and the yen, while Finspreads said that short-term players were long of the dollar against sterling.

Another active area has been commodities, with IG Index reporting a strong flow of up-bets on palladium and sugar.

Palladium is benefiting from speculation that makers of catalytic converters might start switching to this metal from platinum, and it has risen from $195 to $235 over recent weeks.

Sugar has risen in value by more than 30% on the number 11 contract since May last year, on speculation that the high oil price might prompt refineries to convert ethanol derived from sugar into motor fuel.

This entry was posted on Monday, October 31st, 2005 at 9:45 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.