Financial Spread Betting News

Capital Spreads Market Commentary

Very little info today and the world seems focused on the Saudi Arabian security around its oil exporting hubs. The knee jerk reaction to the failed attack early on Friday shows what would happen if there was a successful attempt. The problem for Oil dealers is that whilst the potential for higher prices in such a scenario is huge, in the meantime it is difficult to pay too much over the odds for what is in effect insurance cover.

The FTSE this morning is being called up 12 points at 5872-74 and the way appears clear for an attempt on the highs once more. High Cap Corporate profitability is showing strong growth at the moment and investors are being tempted into the markets once more. The Dow and S&P which spent most of Friday worrying about the Oil price has recovered some sang froid and is back at 'around' the 11100 and 1293.0 levels. Clients are eying the 1295.0 resistance in the S&P which has repelled all attackers over the past few months. Another failure, coupled with a close below 1283.0, could indicate a retracement back to 1250.0 and possibly lower as chartists may start to worry about a double top formation BUT any break and close above the resistance at 1295.0 may be the start of another big move to the upside.

Wall Street this morning is at 11092-96 up 30 on the close on Friday.

Alliance and Leicester (AL/) came in with numbers pretty much as expected as bad debts reared their ugly head once more. Most high street banks are showing increases in bad or dubious debts but the risk levels are probably much lower than in previous slowdowns as controls are much tighter than in the past. Alliance's shares will probably open lower this morning as the profits were actually lower (due to exceptionals). Our Clients are pretty light in this stock as, for some reason, it is not perceived as 'sexy'. The stock has had a very good run recently as rumours of UK banking acquisitions continue to swirl around.

Currency markets are in a bit of flux today with the Yen on the march again. USD/JPY is now at 116.16-19 down 74 from Friday. Consistent good economic data from the Land of the Rising Sun is finally giving dealers the prospect of a tightening from the BOJ (although not in the near term). Sterling is the whipping boy once more as the UK economy looks more and more out of phase with the rest of the world. Clients remain heavily short of Sterling and are taking any rally as a new selling opportunity. Cable is at 1.7412-15 down 44 pips this morning and the Euro, likewise a little weaker at 1.1854-56. Support in the pound is at 1.7360 quite a way lower.

Metals went all over the place last week but finally ended up unchanged(ish) on the week. Copper was particularly volatile pushing sharply higher or lower on virtually every opening. Opening today around 2.2085-2.2115. Oil is almost a dollar lower showing falling security worries in Saudi. April Nymex is now at 62.05-62.11 and the market remains one of the most dangerous to be involved in.

Markets opened weakly yesterday and after testing support levels in the Dax, S&P and FTSE were buoyed by the lack of selling follow through. Once the Americans came in buyers were tempted out of the woodwork and the indices ground higher in the later afternoon. Our clients remain short having decided not to take profits in early trade. This morning sees prices solid but unspectacular with the FTSE called pretty much unchanged at 5870-72 as the markets digest earnings reports over night. Nestle in Switzerland has come in at the higher end but the trading statement is decidedly downbeat for 2006 and Viacoms release was definitely poor with eps at 37c vs 44 expected.

Colt Telecom's statement merely proves how difficult it is to make money in the telecoms sector at the moment. The company has not returned a profit for over four years now and looks no closer than last year on turning this around. Sales were only up 0.5% which is disappointing. The shares are likely to remain at around the 66p mark this morning.

Currency markets remain absolutely deadlocked. For the last four days I have talked about the 1.1880 support in the Euro and it was attacked once more yesterday after the CPI numbers from the states. The level held and now clients are buying the Euro at these levels hoping for a bounce from the repeated failures to drive lower. The Euro at 1.1906-08 is almost exactly the same as this time on Tuesday and Wednesday.

Falls in the Nymex helped the Dow and S&P yesterday and clients remain undecided as to whether this is a buying or selling opportunity. In the absence of news they are doing what they should (i.e. nothing) and sitting on their hands. Nymex at 60.66-72 is a full $2 off the close of Tuesday and just easing off in early trade.

Gold and other precious metals continue to consolidate after the falls of last week and in tight trading around the low $550's punters are cautious here as well to get involved.

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Capital Spreads Market Commentary

Finally, the Dow has broken through the 11000 level to close at 11028. Unfortunately the S&P 500 is well off its highs of early January (i.e. a full 20 points) the Nikkei managed to drop 250 points last night and the European Markets whilst no doubt at their highs are making heavy weather of pushing on into higher territory.

The FTSE will have another go at the 5800 level in early trade and the call is for the market to come in up 10 at 5801-5803. The Dow has drifted slightly overnight and is now at 11011-15 as has the S&P which is down 2.5 points at 1273.1-1273.5.

Clients have been heavy sellers of the Dow and the S&P at all levels above 10950 and are now looking slightly anxiously at the possibility of another sharp push higher. With US rates nearing highs the chances of the US indices rallying whilst the rest of the world pauses for breath have now increased.

Billiton (BHP) came in with very nice numbers (surprise, surprise) and the Stock is up 2% in Australian trading. Clients are long the stock (and suffering in the recent falls) and are already calling for bids on the open so any rally is likely to come in for initial selling. Momentum indicators have turned negative for the stock so positive price action is likely to encounter heavy resistance. 965-967 looks like the opening level but don't hold your breath.

The Banking sector continues to announce record profits all around Europe which will keep the sector well supported. Banking takeover rumours continue to wing around the market which will keep the shorter term dealers happy. Some of the smaller players are now looking decidedly expensive as the premium on these M&A speculation is spread around the more obvious targets.

As mentioned yesterday the Sterling support at 1.7380 came under attack once more and this time failed to hold. Cable was sold all the way down to 1.7280 as longs were mercilessly hunted down and killed. The currency then managed a bit of a rally but is still well below the level at 1.7340-43. The Euro as also expected hung on to the 1.1880 support (although it briefly traded below here) to close virtually unchanged at 1.1910 where it remains this morning (1.1908-10). The Euros continued ability to cling on to this support has encouraged many clients to set up longs at this level.

Gold, as mentioned yesterday, needed another down day to break into bearish territory rather than just be considered a correction. The yellow metal managed a modest recovery but is still fragile. Dollar weakness would help the cause and this would probably be the catalyst if a return to the highs can be contemplated. At 546.5-547.1 we above support (at around 539.0) but not that far away. Clients are now absolutely neutral with as many buyers as sellers.

Oil (weak again) and now down below $60 for the front month. Support would appear to be good around here and we may have a few quieter days as traders move into the April contract and look for the next direction.

The poor performance in the metals market yesterday and this morning is expected to hit the Mining sector again as will the slide in Oil prices with BP and Shell. On the positive side every other sector (especially banks) are looking very strong and the FTSE is looking to open some 16 points higher at 5810-12, through the 5800 level!

American markets although not closing at their highs were also well off their lows, which was where they were at with only 1/2 an hour to go last night and with the Nikkei putting on a nice little 300 pointer this morning the way looks set fair for the early morning session. The Dow is quoted 40 up from the close at 10928-32 and the 11000 psychological level looms large once more.

Again there is almost no corporate or economic data today so traders will be happier following the current trends.

Currency markets continue to look warily at the support levels for the Euro and Sterling as mentioned several times 1.1900(ish) for the Euro and 1.7380 for Sterling are both now good solid levels and the market continually attempts to break them but by the end of the day is back above them. Today is no different with Cable at 1.7424-27 having spent all of yesterday between 1.7380 and 1.7440 and the Euro at 1.1910-12 hovering uneasily and awaiting data to send us one way or the other.

The Yen continues to look more likely to strengthen than weaken as the economic data begins to show stirrings in the almost extinct Japanese consumer. With US growth looking weaker the longer term traders are picking up Yen on dips. At 117.27-30 the currency is below resistance at 117.90 to 118.10 and buyers of the Yen will remain short so long as this level holds.

On the commodity front clients have finally given up the ghost on Gold and are now short the yellow metal. The price is just below support at $540 with the next level at 535.5. The early call over night was much lower but buying in late business in the Far East has brought us back to unchanged on last nights closing levels. At 539.1-539.7 we are still (just) able to say that the recent fall may be only a short term correction. Another fall like yesterday and we would be able to confirm the bearish trend and look for a possible return to below $500. Copper had one of it quieter days yesterday closing almost unchanged at 2.2305-35 but Silver and Platinum continued on Fridays dramatic falls and closed 28 cents and $25.5 lower respectively.

Oil is now looking peaceful at around $61 with bulls now being squeezed out of speculative longs. We are now back at the medium term pivot point (actually just below it) and new buyers may now be more fortunate than the recent bulls have been. March Nymex at 61.17-23 (April at 62.27-33.

With Oil and Metals off over the weekend the FTSE is looking vulnerable this morning although the early call is for unchanged at 5764-66. Rio Tinto, Anglo, Billiton etc are not expected to start well but the rally in the US almost from the moment the European markets closed will have given a boost to the overall market. Clients are still bullish and buying in pre-market activity.

The Dax is not surprisingly higher this morning at 5710-12 up 10 or so with optimism rather better placed due to the boost in banking and Technology stock.

There is little corporate info this morning with no major trading statements but this is pretty academic as there is more than enough takeover rumour to keep us all happy. BAA is one of the few where there is actually some fact behind the hot air but as Mr Stellios from easy says it is difficult to see how this can be allowed through without some form of break up agreed. Pendragon's takeover of Vardy is beginning to look fully valued now especially with personal debt levels at the current highs and with a further hike in the price being expected clients are looking for bids. Lloyds continues to benefit from rumoured Spanish suitors as does Bradford and Bingley. Lloyds have announced their own cautious investment banking expansion plans over recent months and even at 548p the shares do not look massively pricey.

Currencies are very quiet this morning after the Dollar yet again ignored US data (for the second time in successive Fridays) to place a good solid rally versus the other Majors. The Euro, this time, took the brunt of the damage as short term support at 1.1950 was broken but major support at around 1.1900 just managed to hold on. At 1.1897-99 this morning dealers are having another look to the downside but clients are looking for support to hold and are long at the current levels. 1.19 has been the pivot point for the Euro/US dollar since late September and we can anticipate a nice little battle for supremacy over the next few days. Sterling is sluggish this morning as well with the dollar looking to pressurize to the down side, at 1.7406-09 the momentum is still negative but we have bounced violently three times from here in the last four days so dealers are understandably cautious about getting short. A break and close below 1.7380 would be the trigger to bring more short positions to bear.

As mentioned commodity prices are a tad weak once more with Gold back to last Wednesday's lows. The bounce of Thursday is now officially of the 'dead cat' variety and punters who were tempted in are looking nervously at the $540 support region. A push below here would open up potential for a retracement all the way back to the $500 level especially as real currencies (i.e dollar, euro, sterling and even potentially the Yen) are giving good interest returns.

As mentioned ad nauseam March Nymex has been looking over bought for quite some time and even blood curdling sabre rattling by the US and Iran has been unable to push markets higher. The problem is that at the moment there is more production than is required (which should send prices sharply higher) BUT nobody wants to be caught short of the black stuff if the 'merde' hits the fan in the Middle East. At the moment everyone is still talking which is causing the general drift lower in prices. Not a market for the faint hearted!

Takeover and merger mania hit the UK once more yesterday as rumours of major bank takeovers combined with the more solid activity around BAA pushed prices dramatically higher over the day.

Citigroup were touted as possible wooers of RBS one of UK banking behemoths BBVH are talked of as bidders for Lloyds after pulling out of the BNL competition. Early calls for a pull back in the FTSE index are not worrying clients who have continued to buy into UK equities and have had a pretty good time of it over the past few days.

The FTSE is now at 5800-02 down just 8 points as is the Dax at 5726-28. Wall Street tried to push into the higher end of the trading range in the 10950's but the pressure of selling at these levels proved too much once more and the Dow drifted back below 10900 to close only some 20 odd points up. This morning sees little early US business but, again, clients appear slightly positive for the day and are buying at 10890-94.

Anglo American's De Beers unit came in with numbers pretty much in line with expectations and the shares are quiet on the open at 2070.1-2074.9 down 10p but Anglogold somehow managed to triple losses which even on the explanation of write downs and currency losses (where was the FD I wonder) must have taken some effort in a market where your major product has virtually doubled in price.

The power of Goldman Sachs will be tested their new forecast on the USD is that it has peaked against the EUR and should slip over the coming year. The Euro is off a little this morning as dealers solidify the trading range of 1.1950-1.2040 and longer term traders are looking for a close outside this range before placing their bets. Current price at 1.1973-75.

Sterling is still in a major bear trend but has now rejected four attempts at the minor 1.7380 support which has caused a bit of short covering overnight to push us higher to 1.7447-50. Clients are now flat and seem undecided as to next short term direction. Japan production data was unexpectedly strong overnight which caused a strong Yen rally versus just about everyone. USD/JPY has dived 100 pips back to 117.75-78. If we close below 117.90 this evening the way could be clear for a longer term move back down to the 114.00-115.00 area.

Gold reversed much of Tuesday's fall with a $14 rally to 566.5 but has started off today on the weak side as investors in the Far East breathed a sigh of relief at the Rally and sold out of painful long positions. At 557.5-558.1 the Yellow metal is back down by over $8 from last nights closing levels.

Oil also struggled all day after traders indulged in a short term rally which took out speculative short positions before diving back down below $63. At 62.68-62.74 for the March contract clients are quiet after taking some fierce hits over the last few days.

With 10 points of dividends off the FTSE this morning even without the slump in metals hitting mining stocks the outlook for an up day was not good.

Currently we are calling the FTSE 100 off 25 points but sellers are entering the market as worries over the viability of such extreme commodity valuations may take the shine off Rio, Anglo, Antofagasta and Billiton. All four are heavy hitters in the FTSE and combined with the further fall in oil which could push down Shell and BP we start the day on a definite downer. Early calls are for 5722-24.

The Dax is doing even worse with early indications of off 50 points at 5623-25. Hopes that the Cisco results would help the markets are now looking wide of the mark as the US markets stagnate at last nights closing levels.

Clients have been negative of the US market for quite a while now and profit taking has been the order of the day over the last few trading sessions. The Dow is now at 10742-46 only a few points away from the low of yesterday at 10731 and confidence does not appear high.

Glaxo results are not expected to surprise but they may be taken badly as results are currently being looked at from a negative rather than positive viewpoint.

Yesterdays comments on this report proved to be rather more prescient than my normal missives with currencies and commodities obliging by moving in the indicated directions. Cable continues to look weak and is now down on minor support at 1.7433-36, the Euro remains in its trading range (1.1950-1.2040) and the Yen is putting on a spurt having rallied to 117.81-84 from 118.40. Clients remain net sellers of Sterling and net buyers of the Yen and Euro.

In commodities the warning that markets were looking a bit tired came in with a vengeance as gold put in its worst day for over three years tumbling by 20 dollars on the day. Expectations of a bounce are not coming to fruition this morning and clients are wary of buying until some support is built up. One of the catalysts to yesterdays move was the breaking of the short term upward trend line at $569.3 which gave bear raiders the opportunity they had been waiting for. There is a light support level at $542 and a bigger rising trend line currently at $530. Copper, Platinum, Coffee, Sugar...etc all came in for a mauling and today may tempt in some early 'bottom pickers'. Wiser heads may be more advised to wait a while before dipping a toe in again as markets have a habit of indulging in 'dead cat' bounces in these scenarios.

Oil is off again as traders, who as mentioned yesterday, are long (hoping for a politically induced rally) and are being forced out of positions. We are now below support levels and the way is clearer for a possible push down towards $60. Clients continue to buy though and the hope is for a relief rally. Nymex at 62.86-92.

A very boring but rumour laden day yesterday is being followed by a very boring open this morning. Even the Nikkei only managed to move 27 points overnight which (in recent times) must be a record of some sort. The FTSE is being called some 10 points higher on the open at 5779-81 and the Dax unchanged at 5667-69. The US markets eventually managed a positive close at around the 10800 mark in the Dow having flirted with support at 10760.

Clients are now long of virtually every market from indices to equities and commodities (which may give some pause for worry!) and are looking on a continuation of the current bullish outlook.

We are very short of information this morning with little in the way of corporate numbers and nothing from the economic indicator machine. Aviva came in with numbers slightly better than expectations and the trading statement for 2006 was also very upbeat the shares are likely to put on a bit of a spurt this morning with calls for 5p up at around 730p. The shares have been hammering at the 730 level for a while now and investors will hope than these numbers will help to push through into a new trading range. Early quote is 729.6-733.5.

Sterling is once more under pressure and the rally of early Jan is now a distant memory. With Cable now under 1.75 dealers are likely to push for a new attempt at the bottom of the extended trading range with the medium term support at 1.7235 a target. That said the currency did bounce off the minor support at 1.7435 yesterday which has given some hope to bulls. Cable is at 1.7487-90. The Euro/USD chart is also beginning to look like a downhill ski slope but, although technical indicators are definitely now negative, punters remain positive and are buying into these levels. Significant support is still some way off and we are likely to see drifting markets between 1.1950 and 1.2040.Euro is at 1.1995-97. Japanese money supply data has put a spring in the step of the Yen (at least for the moment)and dealers are now looking to see whether the 118.00 level holds with the Yen up some 70 pips overnight. The current price at 118.39-42 is very much mid market.

Gold (yet again) hit a new high yesterday as did copper but the markets are now looking tired and dealers found it difficult to make any headway. Consequently there was a sharp sell off in evening business which took us below 570 again. Our clients are now short of most metals at these levels looking for a pull back on profit taking.

The brief blip caused by Iranian nuclear ambitions did not last long in the oil market with dealers desperately looking for new impetuous. The market is now long of Oil and is definitely looking fragile with March Nymex coming up for delivery we could see a widening of the front month spread versus April and May. March Nymex is at 64.70-76 down another 30c this morning.

With the US markets closing almost on their lows on Friday and with Oil putting on a surge (although not as big a move as might have been feared) punters could have been excused for thinking that European markets would be feeling a little blue today. But, not a bit of it. The FTSE is called up some 4 or 5 points at 5761-63, not much but encouraging in the circs' and the Dax is called up 10 at 5668-70.

Ryan air has given us all a bit of a lesson in the effects of high oil prices on corporate profits with revenue up 27% but profits down by over 20%. This will come as bit of a shock to share holders as the forecast was for a rise of 15% in net income. The reason for the discrepancy has been down to one fact alone the lack of fuel hedging in a rising price scenario. The shares are likely to drop substantially on the open but the falls will be tempered by the continued strong growth of the overall company.

Currency markets are taking Sterling to task this morning. With the Fed and the ECB indicating that rates may be going up still further there is not much appetite for a currency which appears to have a divergent view on rate expectations. Cable has broken back through the 1.7600 level and seems to be accelerating to the downside in early trading. A close below 1.7500 this evening would place us back in the lower half of the current medium term trading range (1.7880 to 1.7125) and at the current price of 1.7552-55 it is not looking positive.

Economic numbers from Japan showing continued growth has given some support to the Yen (though not much) and we are back at pre non farm payroll levels.

Clients are busily buying dollars against virtually everything but the numbers on Friday in conjunction with the GDP numbers released earlier last week do not point to a particularly strong US economy and we may be approaching a change in longer term expectations on currency directions. The Yen at 118.54-57 is stable this morning with little impetuous in either direction, as mentioned clients are buying the dollar but there appears little solid to go on.

Gold is up (again) at 571.2-571.8 having had a little profit taking on Friday. The Monday morning movement is becoming quite predictable as the Far East appears to be buying on the off every time. We now have minor resistance at 573.8 but the rate of price increase seems to be slowing up as buyers at current prices are not so thick on the ground. The commodity has not had a blow out to the upside and traders are looking for indicators that shorts are being squeezed once more.

Oil is not surprisingly up this morning but not as far as might have been expected. At $66.00-06 March Nymex is up 60 cents over the weekend close but this is still lower than the prices of early last week our punters are small long but nothing exceptional and we are not seeing any appetite on the buy side this morning. A feeling of wait and see seems to be permeating the markets as the expectation that Iran has some other reason for its current stance is holding sway.

The world took fright once more as Muslim sensibilities, upset by a political cartoon in some minor Danish newspaper, set off a wave of over reaction in the Arab world. Brandish a gun or wave a burning flag and you are bound to find a willing journalist to inflame the situation. Oddly enough the one market which an outside observer may have expected to take fright did the exact opposite. Oil slumped another $2 to the mid $64's as speculation on Iranian atomic ambitions took on a calmer atmosphere.

In the fear over increased world tensions coupled with the continued rise in commodity prices dealers found all they needed to give the markets a bit of a nudge to the downside with late trading in Europe being particularly bloody. The FTSE slumped 50 points in the last hour of trading and the Dax doing even worse with 80 points being removed in the same period. This morning sees us stabilize a little with the pre market call on the FTSE up 15 points at 5759-61 and the Dax up the same at 5661-63. The Dow having dropped some 100 points yesterday is steady at last nights closing levels of 10851-55 having once more decisively rejected the 11000 resistance.

Today sees the much feared/loved Non Farm Payroll (NFP) number from the states at 13.30. Analysts expect plus 250K for the number but the risk must be to the downside as the GDP number from last week may be praying on the minds of investors. Another major weak figure could leave markets looking very gloomy.

As mentioned yesterday currencies tend to go to sleep in pre NFP trading and today is no exception. Cable traded in a 60 pip range for most of the day and today has seen about 25 pips which will probably define the pre number range. A weak figure will see us through 1.7810 to the upside and pushing once more for the resistance at 1.7890 and a strong number will see us down below 1.7720 and maybe giving support at 1.7640 a shot. Cable at 1.7774-77.

On comments from the BOJ that rate hikes in Japan are not on the cards the currency took a further dive. This is not surprising as with huge government deficits and banks which are technically bankrupt the temptation to keep rates as low as possible for as long as possible until the overall economy goes into an inflationary growth period is too strong to ignore.

Gold, Copper, platinum...etc hit new highs once more yesterday and punters have turned round again and put on long positions once more. Clients were briefly short of Gold and Copper but have now closed these out (at losses) and have bought into the rally. Gold at 572.8-573.4 is at new highs again this morning.

Google helped to ensure that the Nasdaq 100 opened very weak yesterday but the effects of the missed target were muted on the rest of the market as the cause was a higher tax charge which does not effect other company expectations.

Overnight sees buyers entering the market once more although our clients are still wary of the US even after the rally in late trading. The FTSE has ignored early calls for a rise and has seen sellers as an initial price above the 5800 level obviously proved too much for some. Profit taking in the market moved us down from pre-market calls at 5810-12 to below 5800 in the first minute of dealing but our clients are still positive and buying the falling market. The absolute price of the Dax moves ever closer to the FTSE with the gap now at just 55 points as the opportunities in the Euro zone continue to look better than for the UK.

Rio Tinto came in with not only good numbers but also an upbeat statement for 2006. As metal prices continue to move to prices undreamt of six months ago it is difficult to see how the Mining sector is going to do badly. Revenues to the poorer parts of the world should also be going through the roof as the OECD nations continue to outbid themselves for a static supply in a rising demand situation. At 2966.1-2972.9 the shares are just off their all time highs at £30, the type of nice round number which can create a psychological resistance level in dealers' minds.

Currency market were very peaceful yesterday and with Non Farm Payroll data due out from the states tomorrow it is unlikely that the dallar will go walkabout 'today'. The Thursday before the first Friday of the month has become a kind of desert in the trading month as long term traders tend to wind out of positions and the day traders are not big enough to dramatically affect the markets. Cable at 1.7744-47 is unchanged overnight and our client are net flat with longs matching shorts. Ditto the Euro and the Yen (although there was some profit taking today from clients who had sold the Yen on the bounce from the 114.00 support).

Oil fell dramatically yesterday as Iranian tensions reduced on EC talks. The problem is that the price is too high for supply levels but traders are frightened of some dramatic upswing in political disagreements between the US and Iran. Our clients are in the same quandary as looking at Oil supply levels an 'off plane' observer would say that they were quite high so why has the price been rising. At 66.82-66.88 we are $2 from the highs and looking weak on days with little news.

The saying 'to google' may start to take on a different meaning after the second dramatic drop within a month. The shares are likely to open below $400 dollars after the company announced that it had missed earnings targets by a wide margin yesterday evening and investors are looking a bit seasick from the constant share turbulence.

This morning sees most indices lower as the US failed to move higher after the latest Fed rate hike. With US rates now at 4.5% dealers are speculating that there is not much more to come and were busy selling dollars yesterday afternoon as they searched for the next 'tightening rate' currency.

As commented here before the continued failure of the US markets to make ground is beginning to worry our clients and any rally is being sold into. Whenever the market stops moving for a while we tend to just get sellers of the Dow and the S&P as opposed to the FTSE DAX and Nikkei where the action is generally two way. The Dow at 10814-18 is off 50 points over night (mainly on the Google news) and the FTSE at 5749-51 and Dax at 5652-54 have moved in sympathy to be 10 and 20 points lower respectively.

Cable and Wireless are struggling on yet another profit warning and our clients (like other investors) were caught out by the subsequent price fall. This morning sees little action at 99.2-100.1 but the sentiment has turned negative and this is one of the few shares where our clients are heavily short (having cut and reversed late yesterday afternoon). Party Gaming another popular share has also been less than pleasant to investors in recent days as the big boys lighten their holdings after the results of last week. The shares have now tumbled from 148p to the current 127.1-127.7 but our clients are still buying.

BskyB came in with good figures for virtually every sector with new subscriptions up 'churn' down and average spend up. The numbers justify the share price hike this morning which will come to some relief to holders as the stock has completely missed out on the recent rally in the FTSE 100 and was trading on yearly lows just a few days ago. At 493.7-494.8 up 7p longs are looking a bit more comfortable.

Currencies were the major movers yesterday with Cable trading a 200 point range, mainly to the upside as resistance at 1.7750 was breached in mid afternoon trading which caused a solid move up to 1.7860 before drifting in late trade. Clients are short once more and looking happy to stick with the weak sterling story. At 1.7806-1.7809 there is not much to go on this morning but resistance at 1.7890 could prove attractive to the market this afternoon.

Gold hit new highs (yawn) as economic worries caused more investor to move into the market. At 566.1-566.7 we are off a little this morning with profit taking the order of the day. Our clients are now very short looking for a pull back.

OPEC's agreement to keep production levels at the current high rate helped oil to fall from its highs and at 67.33-67.39 down 50c this morning the market is looking for some fresh impetus to regain the hard fought highs above $58.50. Dealers are long and wrong at the moment which could cause an acceleration to the downside this afternoon.

A very, very quiet day yesterday is followed by... A pretty quiet opening this morning. Dealers are frightened of being the one to push the Dow or S&P any higher as the 'great, master of all he surveys' Mr Alan Greenspan winds down to retirement today. The handing of the baton of the Chairman of the Federal Reserve has often been seen as the catalyst to dramatic moves. Having been in the market since the dawn of time I can remember the time when Paul Volcker left and the consternation that ensued. The lack of a, perceived, experienced hand at the tiller was one of the reasons put forward for the stock market crash of 1987 when Mr Greenspan had been in office for only two months. The Dow is looking very nervous as investors ponder the coming rate hike which Mr Bernanke is likely to inflict to 'show his credentials'. In reality' if this was not his first meeting, it is unlikely that the current data would justify a move and we may see the markets react badly to what is a well pre-warned move.

The FTSE is called some 8 points higher this morning at 5785-87 on Oil price strength and on continued takeover talk on various UK industrial companies (which was a bit of a surprise to me as I did not realize that we had any left!). The Dax is called slightly higher at 5673-75 up 15 points with traders buying in pre-market trading. The Dax was some 300 points lower than the FTSE last week but managed to get with 60 pips at one point yesterday. Punters are betting on the index once more trading through the FTSE 100 for the first time since the tech fallout in 2000.

Currency markets are back in the trading range of early January with cable unlikely to move higher than 1.7750 or lower than 1.7630 in lackluster business. Our clients are mixed with buyers matching seller on the open. The current price at1.7715-18 is up 50 pips overnight as the dollar gives up some of its gains of the last few days. The Euro is likewise slightly higher versus the dollar at 1.2115-17.

Gold finally broke through the resistance at $563 as clients continued to sell into the rally. With the Far East continuing to buy in early trade dealers are being caught out on short positions as they attempt to call a high. The print this morning is at 568.7-569.3 but has been as high as 571 this morning. Unfortunately our clients have, finally, been caught out a little in Gold as seller in the low 560's is now sitting on losses.

Oil has broken above resistance at 58.45 and is trading at 68.56-62. If the market closes this evening above here the way should be clear for further highs up to the July/August peaks around $71.

Mulcahy invests in Delta Index

Former AIB chief executive Tom Mulcahy has taken a stake in Irish-owned financial spread betting firm Delta Index.

He has taken part in a €1m round of fund-raising which also involved Delta Index managing director Dermot O'Donoghue. Delta has now raised €2.3m since it was founded in 2002.

Earlier investors included Dolmen Securities, parent company of Dolmen Stockbrokers. Mr O'Donoghue said the new money would be used to boost sales and marketing and to upgrade the company's technology and products.

Capital Spreads Market Commentary

The weekend saw little action and most markets are opening unchanged. With the FTSE at 5786-88 we are still at the highs since mid 2001 and the way would appear cleared for a move towards heavy resistance at 6000.

Clients have their buying boots on once more with a heavy set of orders to open new positions this morning. With sterling weakening the world value of UK stocks looks cheaper by the day. German and French markets are solid this morning and punters are happy to hold positions for the final days of the month. The Dax at 5627-29 is off slightly but this more reflects a spike on Friday afternoon (as shorts were squeezed out) rather than serious selling.

One thing that may keep a lid on the markets was a series of downgrades from analysts for companies as diverse as BP, Hays and BSkyB. Aside from BP many of the downgrades involve companies whose main revenue stream is UK centric and this may be a precursor to a general downgrade of UK plc.

In the US analysts were falling over themselves to explain away the weak GDP data on Friday. Forgive me for being a cynic but when the economy was going in the other direct economists were forever talking growth down and now they appear to want to talk it up. Do not be surprised if the US starts to slip into a mild recession as unexpected numbers often reveal weakness not seen by the forecasters. Of course equity markets frequently move in the opposite direction to economic data as investors are looking for return and in an environment where interest rates are easing this will translate into better returns for shares.

Currency markets are very quiet this morning with dealers marking time and waiting for a definite 'feel' to the day. After Fridays perverse move with the Dollar, surprisingly, rallying on weak data dealers were left licking their wounds. In normal circumstances a bad GDP number would mean a big fall in the dollar but after the initial knee-jerk reaction higher Sterling Euro Yen and Swiss all proceeded to 'take a dive' and plunged to lows for the week. Sterling and Euro are both now back in the volume trading area which defined the first two and a half weeks of January and we can now look for Sterling to trade between 1.7750 and 1.7550 and the Euro between 1.2160 and 1.2020. This morning sees Sterling at 1.7669-72 but sellers are likely to have the upper hand in early exchanges of fire.

Gold is having another go at the resistance levels of $563'ish but the move appears half hearted and our clients continue to sell at moves above 560. The rolling Gold price at 561.2-561.8 gives encouragement to both bears and bulls!

Unfortunately our net client trading in Oil was similarly negative but in this case most punters rather jumped the gun and were caught out by the rally of Friday. Dealers are now looking at technical resistance at 68.45 as either a high or a trigger for further buying. The March future at 68.07-13 is trendless at the moment as dealers await news from the EC/Iran negotiations.

A peaceful opening after a very good day for our clients. The general drift higher in the FTSE and Dax coupled with the US market doing nothing very much suited nearly everyone. After yesterday GDP number showing growth of 0.6% against expected 0.5% put a bit of lead in investors pencils and they pulled their buying boots on.

With the Nikkei putting on another 250 points overnight and the US markets pushing up this morning we should see the FTSE come in another 25 points higher at 5724-26 and the Dax likewise up 20 at 5460-62. There is little corporate news out today so any moves on the open will be difficult to improve on and we are getting sellers in pre market trading.

As mentioned yesterday the currency markets are stuck in tight ranges at the moment although there was an attempt mid-morning to break higher as dollar longs were chased out of trades. By the end of the day we were back virtually unchanged and at 1.2256-59 for the Euro and 1.7856-59 for Cable this morning more of the same can be expected. Sterling has now closed at or around the 1.7870 level for three days in a row and the likelihood is building for a sharp move in one direction or the other. Bulls remain in charge and the probability must be for a break to higher ground especially with the GDP number surprising to the upside but the longer we remain at this level with out breaking and closing higher increases the chances of a failed move and a subsequent retrenchment to the 1.7550 to 1.7750 volume area.

The Yen is bucking the trend at the moment and is showing surprising weakness versus the dollar. Having broken down below the 115 support level a few weeks ago the dollar yesterday put in a good rally and is now back up at 115.63-66 a second close higher than 115.55 would confirm the move and could open up a shift back towards 118.00.

Gold is stuck just below the mid $560's resistance. With world investors seemingly negative on virtually every world currency the temptation has been to move into the oldest indicator of wealth there is. But there is always a limit as to what enough people will pay at any given moment and we currently appear to be touching one of them. At the current price of 561.0-561.6 we are getting selling once more from our clients who have been long for quite some time. Clients are still net long but not to quite the same extent as in the recent past.

As mentioned yesterday Oil will fall when there is little or no news. With Iran's call for reduced oil production not being taken up (at least in public) by any of the other OPEC members and with yet another day of silence from all the major protagonists Oil gently drifted back into the $65's. This morning sees a small rally but on very light trading and the current quote is 66.02-66.08.

A very dull day yesterday with Capital Spreads taking its lowest dealing volume of the year so far. Clients remain long of most of the indices with dealers particularly bullish in the FTSE. This morning we open some 25 points higher, mirroring yesterdays opening, valuations of corporate UK looks quite cheap at the moment with 13 times earnings being the average of the FTSE 100. In a, generally, weakening economy the BOE will probably be looking to cut rates at some point this year and the likely hood is that this will (in the long run) have a beneficial effect on share price.

So that is the long term view but what about today. The FTSE is at 5669-61 up 25 points and traders will be pushing for the 5970 minor resistance level. A close this evening above here would give an indication that the market is ready to move back towards the 5750 highs once more. On the negative side a break of the upward trend line at 5630 would be very negative as this has held for some 4 months. Dealers will be wary if the index shows signs of slipping in the afternoon as has been the case recently.

In the US the reporting season continues on and after the shocks of last week everybody seems much more sanguine about the Monday and Tuesdays figures. Johnson and Johnson came in bang on the money at 73c a share (admittedly on lower revenue) and investors seemed happy to hold on for the time being. The Dow is called up 10 this morning in light trading at 10719-23.

Not much out in the UK today with only Antofagasta of the big boys reporting.

Currency markets are very peaceful today as the majors settle into their new levels. The Euro has now spent several days between 1.2300 and 1.2260 and the likelihood is with the price now at 1.2288-90 that they will spend most of today there as well. Cable is likewise stuck between 1.7800 and 1.7900 and is similarly right bang in the middle at 1.7846-49. Clients are doing very well just trading the range, buying down at the low 1.78's and then selling in the upper ranges.

To top off the boredom Gold (at 560.0-560.6) and other metals are pretty much unchanged on the day as traders with nerves of steel have been moving towards the Sugar market which has been going bananas over the past week. The past 2 trading days have been over ranges which would normally be associated with an entire years price movement. Sugar closed at 426.0-427.2 and we are looking for more excitement today.

As mentioned yesterday any days where there is no oil related news is likely to mean slipping markets. Iran managed an entire day without annoying somebody which has resulted in Oil slipping back into the $66 range. March Nymex at 66.58-64 is looking fragile but is at the mercy of outside influences and traders are getting fewer and fewer as not only fingers but entire hands have been burnt over recent weeks.

Volatile market is a sure bet for IG Group as profits treble

Stockmarket volatility helped spread-betting firm IG Group treble its first-half profit, its latest update revealed.

And the firm is looking to this summer's World Cup in Germany as a platform to take its sports gambling operation into the betting mainstream.

IG said punters betting on equity indices rose to record levels after October proved to be a choppy month for shares on world markets.

Chief executive Nat le Roux also said the company had seen an upswing in interest in financial binary volumes - a form of fixed-odds betting that has limited risk and limited reward. That helped IG, which takes spread bets on a number of events from share price movements to the number of corners in a football match, increase its pre-tax profit to £20.4 million, from £6.6m, in the six months to November 30.

Turnover during the six months grew by 31 per cent to £38.6m.

"Spread betting is growth business, and growth in the last six months has actually accelerated as stockbrokers have been referring clients to IG to use its platform," UBS analyst Jason Streets said.

Mr le Roux said: "IG has continued to deliver substantial growth in turnover and profits in the first half of the year, underpinned by consistently strong levels of client acquisition and the sustained development of our financial businesses in both the UK and Australia."

Mr le Roux also said that the firm's sports betting division had "achieved good levels of growth", with turnover up by 14 per cent despite the reporting period lacking any major football tournament.

And it is relaunching its sports binary business - originally launched in the summer of 2004 - in a more simplified form and on a dedicated website ahead of the World Cup, which kicks off in June.

Mr le Roux said: "We continue to develop a simplified, fixed-odds offering, which we hope will appeal to a larger audience than our existing sports products. Our intention is to launch this in the spring, in good time for this summer's football World Cup."

And he added: "The World Cup is the single most important thing for our sports business. For the first time we'll be competing with the main internet sports bookmakers."

IG also said that its plans to open a Singapore base were around a month behind as it waited to obtain authorisation from the Monetary Authority of Singapore, but said that it was on course for a February start.

However, the firm said its Australian office had a good six months, with sales nearly doubling on the year before.

Brokers expect IG to post full-year pre-tax profits of between £40m and £45m. IG said trading volumes were "strong" and account opening levels were "robust".

Capital Spreads Market Commentary

After the fall a little bit of stability. All the worlds' major indices put in a bit of a recovery from yesterday's opening levels with the FTSE almost managing to reach unchanged on the day. Clients remained long for the whole day and have carried those positions into today's opening. This morning sees the FTSE up some 10 points at 5670-72 and the Dax up 5 at 5350-52.

The US has recovered from the scares over the last few days and now sits some 70 points off the lows of Friday in the Dow at 10718-22 and 8 points in the S&P at 1267.2-1267.6. Traders will now be looking at the figures from Johnson and Johnson expected out early this afternoon these are expected to show an eps of 0.73 cents and revenue of $13.18B. It was the revenue figures from City group and GE which gave the market its 200 point fall of last week and investors are nervous because company releases are (in the main) being taken in a negative frame of mind. Any failure to match expected numbers will have a disproportionate effect on the market. Ford's really very good release yesterday was almost, but not quite, ignored in the overall bearish sentiment now pervading investors minds.

US numbers today are unlikely to spark much interest as Leading indicators, due out at 15.00 and expected to come in at 0.2% down from 0.5%, are not considered major market movers.

Vodafone is in the headlines at the moment as major shareholders attempt to force the company's hand over its Japanese and US mobile networks. With virtually no share price growth for over 4 years now investors are tiring of the Jam tomorrow scenario and want something now. The sale and cash distribution of the two units would give hard pressed holders some incentive to hang on. The shares are up 2.5p today following yesterdays 3.5p gain and are trading at 123.5-123.75. Clients have been very (very) long of this stock but are now taking the view that this is probably as much of a bounce as they will get from this story and are lightening the positions.

The pound is busily reversing yesterdays dollar weakness with Sterling being the main faller of the Majors after being the smallest gainer yesterday. Clients are looking very nervous about holding the pound for anything other than very short periods. There is very little good economic information to give investors much reason to buy into sterling. A combination of higher borrowing requirements a massive trade deficit and the probability of falling interest rates do not add up to a buyers market. Cable is at 1.7815-18 down 45 today. The Euro is still holding on to yesterdays gains with dealers engaged in heavy two way business as bulls and bears tussle it out. At 1.2280-82 we are in a low volume area of the charts and pressure is almost equitable as to whether the markets should rally or fall.

Gold is having a small breather this morning giving up some of yesterdays move. Buyers (as mentioned before) seem to fade away as we approach the $560 level and without a further push profit taking will probably start to become the order of the day. Oil on the other hand seems to be less worried than the commentators. Listening to Bloomberg/CNBC etc you could be given the impression that $100 a barrel is almost a certainty! Our clients continue to be pulled this way and that but with the suppliers of the commodity being the ones who are pushing the price higher (Iran and Nigeria) rather than an excess of demand the dangers are more of a sudden price fall than a sharp price hike. Nymex is off 40 cents this morning at 67.62-68.

IG Group first-half profit leaps

Spread betting firm IG Group PLC said current trading remained strong and it is confident about prospects as it posted a 34 pct rise in first half pretax earnings before interest, depreciation and amortisation to 21.4 mln stg.

IG said its UK spread betting operation grew revenues by 32 pct in the six months to November 30, higher than that seen in recent years.

The company said several factors contributed to the strong growth in the period, but it was underpinned by continuing healthy levels of new customers.

Turnover lifted 31 pct to 38.6 mln stg while pretax profits increased by 209 pct to 20.4 mln stg from 6.6 mln stg previously.

IG announced it had decided to pay a maiden interim dividend of 1.5 pence per share.

Chief executive Nat le Roux said: 'IG has continued to deliver substantial growth in turnover and profits in the first half of the year, underpinned by consistently strong levels of client acquisition and the sustained development of our financial businesses in both the UK and Australia.

'Current trading is strong and we remain confident about IG's prospects.'

Spread betting allows customers to bet on changes in share prices and other securities without tying up capital.

No excess please, we're skittish

Volatility, in the form of fast price movements offering potential for quick profits, is what spread-betting companies say their clients prefer. Personally, I hate it. Slow but reliable trends in share prices and markets are my thing. If a profit has to be ground out steadily over months, great, that's easy on the nerves, and if a loss accumulates slowly, that's fine, it gives time to exit before serious damage is done.

Volatility, though, cannot be avoided for ever and last week it ran like a rumour through the portfolio. The box with "last week's change" would have shown a loss of about £500 if the score had been taken on Wednesday morning. By Friday lunchtime, before the American markets began their worst one-day fall for three years, there was a gain of £150 and the life was looking up.

Half of New York's slide came after London's close on Friday and so the market here will open down today, probably by at least 1%. It doesn't sound much but it is likely to mean an instant hit of £300 or more for the portfolio. The real worry is the scope for things to get much worse suddenly. I have no short positions at all and a plan is needed.

In that regard, last week was a useful warm-up. The mild panic in Japan, where the Nikkei fell 6% over two days after a police raid on the iconic internet firm Livedoor, had the predictable effect on the portfolio's exposure to JP Morgan Fleming Japanese investment trust, which I'm using as a vehicle for a bet on Japan in general. A week ago, this position was showing a profit of £233.

The locals' reaction to the Livedoor shenanigans struck me as wildly overdone on day one and I expected a bounce-back. The story of economic recovery in Japan from a depressed base (and so offering the possibility of steady, long-term gains) appears intact and Livedoor, just by virtue of its size, does not seem capable of becoming a Japanese Enron or WorldCom.

I thought the same way after the Nikkei's 3% fall on day two. The brave thing would have been to buy at that point. Instead, I cut the position by almost a third. Wimpish, maybe, but the profit on the position was down to £50 and my golden rule was triggered: don't let a winning position turn into a losing position. Day three in Japan brought a small recovery but the rule will be applied again if necessary. That may imply buying back the position at a later date at a higher price but so be it.

Mining stocks provided the relief. Rio Tinto, the portfolio's biggest position, was up 3.5% on Thursday, and Vedanta was even hotter all week. After Japan, it was like being handed a "get out of jail free" card. Should I have played it - in other words, banked some cash? Well, it would have cushioned this morning's fall. But mining, as I've argued here before, is a long-term bet and the only certainty in trying to finesse positions is that you rack up trading costs. That said, expediency demands that at least one of my three mining stocks will have to go if New York's wobble sets off serious market jitters.

But will it? I liked the comment of Ed Zander, chief executive of Motorola, where almost doubled fourth-quarter profits were greeted with a 7% fall in the share price. "Where I grew up, if you increased sales, profits and market share with cool new products, you were doing pretty well," said Zander. There were no out-and-out disasters in the US corporate reporting season, just a failure to meet high expectations. Admittedly, markets trade on expectations, so nothing can be taken for granted, but a major rout still looks unlikely.

Still, profits have to be protected and I'm ready to take cash off the table with reluctance. Euromoney and Weir Group were sold last week after enjoying 10% rises (a £140 profit on Euromoney was banked before Christmas, which is why a loss is shown in the table for the rolled-over position). If more selling is required, the batting order might be: 3i and L&G (financial stocks are vulnerable in market corrections), Rolls-Royce (had a good run), SSL (momentum fading), and United Business Media (media can get clobbered in these conditions). Japan and any mining disposal would also slot in somewhere. In the right circumstances, I'd buy any or all back.

Volatility also brings opportunity, of course. I had a stab at PartyGaming last week and came out again as the price drifted but an "up" bet before Friday's trading statement, with a stop-loss in place, appeals: online poker has not gone away. But the first pick among the possibles is Hunting, an oil services business. The big winner in the US reporting season was Schlumberger, the giant of that industry. Hunting is worth just £400m but should be enjoying the same diet of high oil prices and record levels of exploration by the oil majors. It could be an interesting week.

Capital Spreads Market Commentary

As a company for whom volatility is the lifeblood of business we could not have asked for a better start to the year. Huge trading ranges generally create higher trading volumes and the last few weeks have seen major moves with all markets first moving one way and then the other.

The Dow managed the worst day for almost three years on Friday, falling over 200 points which understandably will have a negative effect on this mornings opening levels in the European markets. The FTSE is called at 5634-36 down some 40 points and the Dax down some 50 points at 5298-00. The Dax being a heavier tech based index is suffering rather more than the UK markets. Clients have been wrong footed in this move and have continually tried to call the bottom of the market which has not been a very pleasant experience.

Early bullish momentum for 2006 has all but evaporated and investors will be looking anxiously over their shoulders as the fallout has been very surprising. Every commentator has been saying how cheap equities are at the moment, which presumably must make them even better value now! The problem was that, as we mentioned here on several occasions, if everything was looking so good why were the US markets not moving higher. No matter what the data sellers continued to enter the markets whenever the Dow approached the 10900 level.

IG index have come in with very good numbers this morning with revenue more than doubling in the second half of 2005. The shares are likely to get a lift this morning from the close at 190 on Friday.

Greene King (purveyors of my favorite bitter, IPA) continue to expand strongly with sales of old fashioned bitters performing well in this era of Lagers and mixed spirits. An increase of 15% in pre tax profits is inline with expectations but the shares will probably suffer on the open inline with the rest of the market. The shares are now in the 6th year of almost uninterrupted gains and investors are in no hurry to get out yet.

Currency markets have seen some serious dollar weakness over the weekend and the retirement of Mr Greenspan approaches and a series of quite negative US centric articles hit the newsstands. Sterling has rallied versus the dollar as well but has been the poor relation compared to the Euro and Yen with only a 1/4% rally versus 1/2% for the other majors. Clients have taken the opportunity to get short at the open with heavy selling above 1.78. The current price at 1.7778-81 is not tempting buyers either and it looks like being a sellers market for the morning session.

Gold goes its merry way once more with a massive extension rally on Friday being reversed in late trade. Gold hit a new high at $568.0 only to retrace all the way back to $555.0. This morning sees little trade as punters look for inspiration but commodities are showing signs of dramatic rallies followed by equally dramatic falls which is generally an indication that long term shorts are being squeezed (finally) out of the market. Further rises may be more difficult in the near term as the market will now be slightly long. Gold is currently at 555.2-555.8 in flat trading.

City's richest man lines up £800m flotation

Smart money on stormy US

Capital Spreads Market Commentary

A dull but profitable day for our clients yesterday. The general drift higher suited most client portfolios as the recovery from the sharp falls of the previous two days brought some welcome relief.

BUT the continued reluctance of the US to push higher was shown once more as the Dow and the S&P slipped in late trading with Oil being mentioned again and again as the reason for caution. When commentators are looking around for reasons to explain falling markets it generally means that investors are not happy. The US reporting season is well underway and for the first time in a while we are getting a significant number of disappointments. With the big boy (GE) reporting this evening we could be in for a rocky ride over the beginning of next week. GE has been gently drifting lower since November's announcement of the disposal of it's insurance arm. In fact yesterday saw the closure of the price gap created by the hike in the shares on the 18th November. The price at the close last night of 34.64-34.73 is 1 cent higher than the close of the 17th at $34.63. Dealers will be looking for support at this level.

The Dow Closed almost unchanged yesterday (up 16) but is finding buyers this morning after Ebay's poorly received figures. The current price at 10872-76 is well above the after hours trading level which fell some 20 points.

European markets are pushing higher, presumably on relief that nothing nasty happened overnight! With the FTSE at 5713-15 up 20 points and the Dax slightly less better at 5437-39 up 10. There is very little information out today with UK retail sales for December and Money supply numbers for the same period looking to be the focal point. Money supply is increasing at over 12% YOY which was giving some cause for concern to the BOE but the trend appears to easing and another weaker number could give interest rate 'Doves' a boost.

Sterling continues it's yoyo activity with weakness in evidence early on and is trading below 1.76 once more at 1.7551-54. Weak retail sales figures from France will not help the Euro either which has dipped in early trade falling back to 1.2067-69 down 30 pips.

Gold continues to make our clients richer men with another heavy rally to the $558 level. Clients have decided that 560 is a strong resistance level and have sold out once more just below the price and set up short positions. The current price at 556.0-556.6 is down $2 overnight in light dollar related activity.

Unfortunately Oil is doing the exact opposite tempting clients to buy at the highs and sell at the lows (nasty for those caught out) as the temptation to view each move as a break up or down is subsequently dashed. Oil is now at a new high since Katrina at 67.52-58 and is squeezing shorts.

Late comment today due to being absolutely knackered after yesterday's massive trading day!

Clients were caught in the headlights yesterday with just about every decision being the wrong one. With fears that the fall in Japan could accelerate nobody was willing to take too long term a view in any market and this caused 'topping and tailing' as traders were chased out of positions.

This morning sees the bounce back, as the Nikkei rallied over 300 points, which is causing a certain amount of relief in equity markets. Coupled with this has been a slight pull back in Oil which has cheered US dealers. Although Apple and Ebay came in with disappointing numbers these have not had the shock effect that was seen over the previous days numbers from Yahoo and Intel. Analysts seem to continually expect absolutely stellar numbers from IT stocks and it is not surprising when they sometimes don't hit what can be rather exuberant forecasts.

The Dow is called up 35 this morning at 10885-89 and the FTSE and DAX are opening strongly at up 30 points each. The early call was for even more but traders have been selling into the open, wiping their brows with relief, and sitting back to await the next opportunity. FTSE 100 is priced at 5691-93 and the DAX at 5425-27.

Sterling is the whipping boy this morning. Traders seem to have taken more notice of today's newspaper comments than they did of the actual figures which were released yesterday. Employment is starting to slip in the UK and this will have a double whammy effect on the currency. Firstly rates will have to come down to try to kick start the economy again which has an initial bearish effect and then secondly this means that tax revenues will also be weaker than expected which could have a further negative effect on the governments borrowing targets. High State borrowing requirements generally have a destructive influence on a currency's outright value. Cable is off 80 pips this morning and is finding few buyers at 1.7551-54.

As mentioned earlier Oil gave up some of its gains yesterday but is still hovering above $66 which gives bulls hope of a further attempt at new highs. Traders are nervous and watching the news bulletin boards waiting for either an escalation of tensions or a pull back by all parties. One of the problem is that in reality it is in Iran's (and the rest of the Oil Producing Nations) interest for there to be tensions in the middle east as this forces up the price of the one product that they sell. So as long as somebody somewhere rattles the odd saber they are hardly going to be crying into their milk! Nymex is at $66.20-26 in light early trade.

And down we go. A few days ago I was asked to write an article on the normal percentage gain in the FTSE in January, as it is accepted practice that the markets rally in the first month of the year. Unfortunately I had to point out that over the last five years the FTSE has had some truly appalling January's and that the, then, current rally of 2% was not normal. Since then the markets have given up all their gains and more and this morning the opening level looks to be well down.

The trigger was the Intel and Yahoo figures where Intel missed by 10% triggering an 8% fall in the shares and Yahoo missed by all of 1 cent which caused a 12% fall (both in after hours trading in the US). This gave the Nikkei a truly appaling start and the Tokyo Stock exchange was forced to suspend trading for a while as market conditions reached extreme levels. The Nikkei closed 460 points lower which makes over 900 point in 2 days. The FTSE will open 60 points off at 5645-47 and the DAX (which is more heavily Tech centered down 80 at 5382-84.

Individual company announcements are unlikely to make much impression in today's environment but analysts have downgraded mining stocks which could leave them under pressure today.

Currency markets are actually quite sanguine amidst all of this but there is a general move towards the dollar as investors retreat towards 'safe havens' (the Swiss franc tends to do well in trying times as well). Cable has fallen some 40 pips but clients are coming in on the buy side looking for a bounce at 1.7650-53 we are bang in the middle of the recent trading range and clients are happy to job in and out. The Euro and Yen are similarly stable today and FX dealers are likely to sit on their hands and watch the rest of the markets.

Gold has been hit hard as traders pull out and wait for the fallout to settle. On the open we are $9 lower and looking weak. With the price now in the mid 540's the fear is that we may see a pull back towards $500.

Oil is once again in the headlines as political problems rear their head. Although we are back at $67 in the March Nymex contract dealers are shorting the market as the feeling appears to be that everybody has too much to lose over any serious disruption of supply. The problem is that we are talking here about countries who make decisions based on ideology rather that economy and in this situation sometimes common sence is the first thing thrown out of the window. Which is why we are where we are! Current March Nymex at 57.00-06.

It can pay to join the opposition

A week's a long time in spreads

Irish Regulatory Changes - Spread Betting

A week's a long time in spreads, James Moore, Business Times

Home Straight

Where is Lewis Findlay, managing director of City spreadbetting firm Cantor Index? Findlay is one of the most popular men in the market, but the rumour mill suggests that he has fallen out with his employer, the huge US bond broking firm Cantor Fitzgerald, and has not been seen at the America Square offices for a while.

"Lewis Findlay is managing director of Cantor Index and is at home working on two projects for [Cantor Fitzgerald vice-president] Lee Amaitis," a spokesman reports, with all the emotion of an automated answerphone.

Rumours suggest that the falling-out is over Cantor's refusal to countenance a flotation of its spread-betting arm. Watch this space in the new year.

Capital Spreads Market Commentary

Once more it appears that I am talking scratched record time. The US markets attempted to follow the rest of the world higher but by the close in the states the various indices had drifted back to virtually unchanged. The Dow is called at 10835-39 unchanged overnight and the Nikkei, which managed to reverse a 200 point fall in late buying to close virtually unaltered, has given some stability this morning. The Nikkei (march contract) is quoted at 15950-70.

The FTSE is called a little lower this morning but clients are not rushing to sell. FTSE called at 5579-81 and the Dax likewise a bit lower at 5386-88.

Burren Energy have come in with a production announcement from its fields in one of the eerr.. dodgier parts of the world in the Congo. This should give the shares a bit of a welcome fillip this morning. OPEC stated yesterday that there was sufficient oil currently being supplied for present demand which may cap the price at the mid $60's. Burren is quoted at 926.4-928.3 in early pricing.

Sterling had another of its doom laden days as the market digested the possibility of rate cuts from the MPC versus likely hikes in the rest of the world. With a weakening economy just as everyone else appears to be waking up dealers are looking at a return to bearish Sterling fundamentals (it seems just like the old days!). Cable is at 1.7432-35 unchanged overnight and Euro is at 1.1835-37 similarly unmoved.

As mentioned yesterday commodity markets are entering their year end phase as most dealers shut up shop until January. This can often have one of two effects the first is that nothing happens as volumes decrease and volatility dries up and the second is that with the removal of the big players prices start to act 'irrationally' as juniors man the desks. Oil is quiet this morning at 58.71-77 as is Gold at 494.2-494.8. The betting this year is for a quiet Christmas break but punters have been caught out before!!

Listening to US stock brokers and analysts on Bloomberg and CNBC you could be excused for believing that the American markets were on a massive bull run at the moment. Although we are not actually in an exact opposite situation, vis a vi Europe and Japan we are. DAX and FTSE are now up some 24 and 17 per cent respectively and the Nikkei is up over 40% on the year. The Dow is almost unchanged and the S&P is up a mere 5%.

US indices drifted all of yesterday having opened higher in line with Europe and our clients ran with the fall locking in some tidy profits. Clients are now almost flat US markets but very long of both the FTSE and the Nikkei looking for further rallies in the run up to Christmas. The FTSE has given up a little this morning and is trading at 5532-34 down some 6 points. Wall Street is at 10842-46 which is slightly up from the close but on no real volume.

Tullow Oils trading statement, although not bad has been taken slightly negatively as investors were obviously hoping for more the shares are off 5p this morning but still within the overall strong upward channel. Clients are taking the fall as an opportunity to buy into more, only a break below 246 would damage the bullish sentiment.

After the weekends multi billion giveaway by 'our Tony' sterling, not surprisingly, came under a little pressure as FX dealers added another Billion or two of extra selling per year to their calculations. The currency markets are not having one of their more interesting days with slight Euro and Yen weakness the only point of interest. The dollar bounced off the 115.90 level again as the markets confirmed the current levels. USD/JPY is now in a 115.80 to 117.25 trading range and is unlikely to challenge it today.

Oil is weak once more but has managed to hod onto the $58 support in the Feb Nymex. A break of this level would indicate fresh selling with a target down at $52 but clients are long looking for a recovery back up. Price now at 58.37-58.43.

Gold actually managed to trade in a $5 range yesterday having hammered unsuccessfully all day at the $509 level the price drifted in late trading and is now mid range at 505.6-506.2.

Oil fell some $2 on Friday but even this was not enough to tempt the Dow or the S&P to break out to the upside. The US markets had a very disappointing close to the week as virtually every other major market closed strongly the effort was just too much. The Dow has rejected the highs for three days in a row and this move higher is looking disappointingly like the last attempt of late November. Only a close above 10920 would indicate some continued bullish momentum but with resistance building up every day this is becoming harder and harder. Our Clients went into Friday long of both the Dow and the S&P but as we reached the highs this optimism soon turned to profit taking with shorts being set up and now the overall situation has been neatly reversed.

The FTSE is called only 5 lower this morning at 5526-28 but clients are selling at this price as the fall in the oil price may hit BP and Shell in early trading. The DAX is opening at 5350-52 unchanged on Fridays close.

Overall with no Major Corporate or Government releases today we expect a quiet day of it in the equity and index markets. A good day for a Christmas lunch!

Sterling is now looking a touch weak as dealers add in another 7 billion of debt over the next few years. Clients have taken the cue and are selling the pound in early trading. Cable is now at 1.7685-88 down 30 over the w/e. The Euro is flat, in the face of minor dollar strength, and is looking comfortable to be back in the old 1.1900 to 1.2150 trading range. The Euro is now hovering just below the major down trend line (currently at 1.2050) set up since the 1st Jan 05. A break and close through this line could be the indicator for a resumption of the longer term bear market in the USD. Capital Spreads quotes the Euro at 1.2007-09.

The Yen has bounced off the minor support at 1.1580 but traders are still happy to hold onto shorts of the dollar as they anticipate a further assault. USD/JPY is at 116.44-47.

As mentioned earlier Oil is looking very fragile with few buyers coming in on Friday evening. The Market has not bounced this morning at all and our clients are selling more on the open. Feb Nymex is at 58.95-59.01 (February contract is a full dollar higher than January).

Gold continues to trade I a very volatile fashion as traders begin to believe that both weak shorts and weak longs have been pushed out of their positions in the past two weeks ( a rally of $50 followed by a fall of the same amount tends to have that effect!). Longer term buyers are now tentatively entering the market once more as Gold comes in $5 higher today at 508.5-509.1 (Rolling Gold).

The Fed removed the word 'accomodative' from it's description of current US interest rates. This small adjustment signals that the Fed governors now feel that US rates are close to (or have reached) a peak for the current cycle. They now feel that rates more closely reflect the economic situation as it is at the moment. Any further major hikes would require further increases in inflation or growth rates.

Wall Street initially took heart from this statement and rallied some 100 points from the levels just before 19.15 in half an hour. But ather in line with recent days the markets failed once more to follow through in late trading and drifted lower in the last hour to close at 10823 up 60 on the day. The early call this morning is for another 10 points off the price and Wall Street is quoted by Capital Spreads at 10810-14. The FTSE is likely to come in a little higher at 5515-17 reflecting the rally and the Dax likewise at 5322-24 (up just 12 points). The markets may be held back by the sudden fall in the Nikkei overnight where a little of the recent rallies has been given back with a 300 point fall overnight.

No major corporate statements this morning but a whole raft of smaller ones with Menzies, Ottakers, Bunzl, Assoc Brit Ports and Yule Catto amongst others giving trading statements. As expected the retailers are showing weak expectations and everyone else is doing quite nicely.

Currency markets are quiet but dollar negative today as dealers absorb the implications of the rate hike. With the end in sight for US rate hikes longer term traders may look to reverse out of their dollars and into other markets showing signs of rate pressure (although at the moment these are pretty few and far between). Cable is back up towards its highs of yesterday at 1.7760-63 and dealers are long looking for a break higher and maybe test the strong resistance at 1.7840. Clients have set up sell orders at around 1.7825 on the chance of this occurrence during the day. The Yen is the big gainer overnight taking 1.5 cents off the dollar from the close. Yen bulls who have been grimly holding on have now had a succession of positive days as the dollar weakens. Today's move has broken the long term upward trend line and chartists are getting on the move looking for a larger pull back over the coming days. USD/JPY is at 118.65-68.

Gold has fallen once more and is now $25 off the highs of two days ago. The spike upwards on Monday did what spikes normally do and took out the last of the short holders. Once the shorts had been carried out dealers then turned round and started to take profits. Volatility over the past few days has been extreme with the market moving $4 or $5 every hour. This morning is quiet but still $4 off on last nights close and is trading at 514.6-515.2. Silver is also suffering having fallen even further from 9.26 down to 8.54-57 currently.

Oil is peaceful and having failed to break above resistance at 61.50 is quiet this morning at 61.27-33. Clients are mixed in the black stuff with bulls and bears almost perfectly matched.

Fa Probe £100K Boss Bet

FA Chiefs are investigating claims one Premiership player put a £100,000 bet on Harry Redknapp - even though he was already the 1-4 odds-on favourite to become Portsmouth boss.

The FA confirmed last week they were working with spread betting firm Betfair after a staggering £15million was traded around Redknapp in the build-up to him taking charge at Pompey.

Keen punter Redknapp insists he did not place a bet on himself, which could have been seen as insider trading.

However, the FA alarm bells are ringing over several large bets, including one from a player who is believed to have placed his bet up to three days before he was appointed manager.

The FA and betting firms are anxious to track down any links as the betting on Redknapp getting the job was unprecedented.

Capital Spreads in £33m flutter, Matthew Goodman, Sunday Times

Spread Betting firm Capital Spreads is placing its bets on a £33m flotation. Its parent company, London Capital Group, has appointed stockbroker Evolution Securities to advise it on a listing on the Alternative Investment Market.

The float comes just a few months after the business was bought by its management from London Capital Partners.

London Capital Group is owned by chief executive Frank Chapman, chief operating officer Simon Denham and sales and marketing director Rachel Brownlow. The latter two, formerly with rival firm Cantor Index, set up Capital Spreads just over two years ago.

Following the flotation, which is expected to take place before Christmas, they will hold 55% of the shares. They hope to raise £15m from the placing of a 45% stake.

Chapman said that one reason for the listing was to swap the debt used to fund the buyout for equity. "We wanted the business to be debt-free," he said.

Funds will also be invested to develop new products and to grow internationally.

Chapman said the prospects for a listing were particularly bright given the good run enjoyed by shares in its larger rival IG Group, which floated in May.

The apparent recovery of Party Gaming shares after it warned in September of slowing growth had also helped London Capital Group's prospects, added Chapman. "There is a window at the moment," he said.

As well as its spread-betting operation, London Capital Group runs a foreign-exchange dealing service and has a derivatives broking arm. It also offers a sports spread-betting site via a partnership with Sporting Index and provides a "white label" service for third parties wanting to offer financial spread betting.

It is estimated that there are 1m active spread-betting traders in the UK. Capital Spreads aims to appeal to the casual punter as well as more professional traders.

Don't bet on it

A colourful insert falls out of the Financial Times. It is from Capital Spreads, yet another City spread-betting firm, and is titled "Learn To Spread Bet". It contains the extraordinary phrase "You do not need to be an experienced investor to spread bet."

The Financial Services Authority has already fined two firms for failing to warn consumers adequately of the danger from this sort of gambling in their promotional literature.

Most in the City reckon spread betting, where the downside risk can be unlimited, is only for the sophisticated punter. Simon Denham, managing director of Capital Spreads, insists that the FSA is happy with his ad, which does mention the "high level of risk" involved, and says spread betting can even help to train market professionals. "Spread betting, oddly enough, is allowed by the FSA as experience in foreign exchange trading."

He admits the ad has ruffled feathers among his rival bookies — one was particularly indignant. By coincidence, Capital Spreads yesterday announced plans to float on AIM.

The FSA assures me: "We don't pre-vet or approve financial promotions. As you've brought it to our attention, we will look at it."

Capital Spreads Market Commentary

US markets decided, once more, to drift lower yesterday and our clients clung onto their shorts in the Dow taking advantage of the ride. Most traders closed out towards the end of the day to book their profits. The fall in the US mainly occurred after the European market close and therefore the FTSE is called down at 5518-20 off some 12 points but dealers are coming in on pre-market business and buying this lower quote. The Dax is off even more being called at 5264-66 down some 20 pips.

A good trading statement from Bradford and Bingley (BB/) should see the shares boosted this morning. Revenue is higher than forecast and costs are lower but they have warned that poor loans are slightly higher than last year (but not significantly so) and misselling costs/fines are greater than forecast. BB have been rallying all year and even managed (to a certain extent) to ignore the October sell off. The shares closed at 383.2-384.1 and are expected to come in modestly higher.

The UK trade balance comes out later this morning at 9.30 and is expected to be unchanged at around 2.3B. From the US (at 14.45) we have the Michigan sentiment numbers expected slightly better at 83.5 and at three the inventory numbers expected down slightly at 0.4%.

Currencies had one of their walkabout days yesterday with Cable (GBP/USD) having done virtually nothing on Wednesday rallying almost 2 cents yesterday. Cable broke through the initial resistance at 1.7355 and quickly moved higher to the next resistance level of 1.7450. After a pause for breath dealers attacked this level as well and, once through, short covering forced the market up another cent to the highs of the day. Sterling is slightly lower this morning at 1.7502-05 in slack trading and clients are heavily short looking (hoping) for a pull back towards the 1.7450 support/resistance level.

In all the dollar selling yesterday the Yen was conspicuous by its absence. Although it recovered slightly during the trading day the currency continues to look weak versus all major crosses and is trading near all time lows against the Euro. EUR/JPY is currently at 142.13-16.

Gold continues to push higher with short covering the name of the game. Bears have been absolutely murdered over the last three/four weeks and there appears to be no end in sight. Clients finally went net long with Capital Spreads yesterday as more shorts were stopped out of positions. Gold is called at 521.9-522.5 up another $1.5 this morning.

Oil is also looking stronger with a very strong late move last night pushed it to 60.60 on the close. This morning continues the shift higher and we are calling January Nymex at 61.40-46.

The threatened rally in the US markets petered out as dealers worried about future growth rates and lack of buying follow through. The Dow has now failed to hold onto the highs of the day for seven days in row and whilst the market is not actually bearish clients are happier to hold short positions than long ones. Volumes are decidedly weak and (in general) markets find it difficult to move higher in light trading. Wall Street and the S&P are slightly lower this morning at 10859-63 and 1263.9-1264.3 as dollar strength wieghs on investors portfolios.

Conversely the FTSE and Dax continue to strengthen with both managing the highest close in 4 years. They are both called slightly off this morning in sympathy with the late fall in the American markets but the overall divergence continues as the European vs American yearly stock market performance widens every day. The American markets have hardly moved all year (dow up 1%, S&P up 4.5%) whilst the FTSE has rallied 15% and the DAX up over 23% (!). FTSE is called slightly lower at 5534-36 and the Dax likewise at 5293-95. Oil is higher which will benefit the Oil stocks in the FTSE which should give a little support to the market.

There are no major corporate announcements today and the markets will await the US Crude Oil inventories this afternoon at 15.30 to perhaps give us a push. There are also some consumer credit numbers due out at 8 this evening (if you can wait that long) which should show an increase in credit by around $4.6 billion.

Currency markets are once again showing dollar strength (one of the main reasons for the lack of performance from the american indices this year) with Cable 80 points lower at 1.7336-39 and Euro off 50 at 1.1742-44. The Euro has threatened to break higher but the closing levels on the day continue to show weakness. Momentum is still in the dollars favour and clients are once again buying the greenback.

Gold went walk about yesterday with some initial profit taking in the morning in europe being swiftly reversed after the US numbers showed little inflation in employment costs. The metal closed once more on a 23 year high and this morning is still higher at 511.7-512.3. Silver likewise had a 25 cent trading range yesterday and closed at its highs.

As mentioned earlier Oil is trading at the higher end of its recent range at 60.40-46 up 50c but clients are wary of holding any exposure over the inventory numbers and our book is currently almost flat.

This commentator does love it when Gordon Brown stands up and says "we" have spent x billion pounds on this and "we" have spent x billion pounds that, as though he personally put his hand in his pocket. What he actually means is that "the tax payer" has spent x billion pounds etc etc. Politicians should always have a note on their desks reminding them that taxation is legalized theft. We now have the situation where his numbers are so bad that merely changing the accounting period (his last little wheeze) won't save the hard pressed tax payer this time. There is finally an 'official' deficit which will have to be filled and this is aside from the off balance sheet private/public initiatives. Eventually the merry go round stops and all the dodgy accounting practices have to be paid for (remember Enron).

Wall Street disappointed again yesterday much to our clients delight. Buyers of the Dow and the S&P are in very short supply at Capital Spreads and for all the bullish noises coming from the analysts our clients are currently voting with their money and selling into the drift down. Momentum is still to the upside but the 10980 resistance on the Dow now looks a long way away and with every failure to move higher it gets more and more difficult to make headway. Wall Street is called at 10834-38 unchanged over night the FTSE is likewise unchanged at 5510-12 and the Dax is 5276-78 up about 10 points.

HBOS comes with a trading statement this morning which shows that EPS is slightly above expectations and that they intend to return some capital to share holders. History shows that returning equity is a double edged sword as investors often take fright arguing that the management cannot think of anything else to do with the funds. HBOS closed at 865.5-866.5.

Greene King (purveyors of my favorite bitter, Greene King IPA) also made a trading statement showing growth in line with expectations (£39m from £34m). Any long term investor in this company would have a smile a mile wide. For a solid (almost blue chip) equity the returns have been almost stellar and the expectations for the future appear to be more of the same. Greene King December is quoted at 713.9-716.0.

Sterling took the opportunity to break above resistance at 1.7400 yesterday and snap up to 1.7440. It is now gently drifting lower and clients are setting up shorts hoping for a return to the 1.71 to 1.74 range. Cable is now at 1.7406-09 and finding sellers. The dollar had one of its poorer days and clients took the opportunity to get out of some losing positions. The Dollar/Yen has been particularly painful with dealers being short for virtually the entire rally. The slight relief of the pull back tempted many to bite the bullet and close out of trades. USD/YEN is at 121.06-09 and our clients are now net flat.

Oil had asniff above $60 yesterday but pulled back in late trading to close just below the level. A little selling this morning has us off a bit more at 59.70-76 but with no clear direction shown.

Gold continues to be a painful experience for traders as new highs are recorded day after day. Some analysts had a long term target of $510 which we just failed to hit yeterday and this morning we are just a shade lower at 507.8-508.4. Shorts continue to grit their teeth and hang on but the going is getting tougher.

The Bears had their day on Friday in the US as, with what were considered to be quite good figures, the Dow and S&P failed to even make a challenge at the resistance levels above the market. As commented before clients are short of the US indices and generally breathed a sigh of relief at the market moves. The Dow eventually closed, somewhat unconvincingly, some 35 points lower. Commodity prices weighed on the index for the whole session with Oil once again pushing towards $60 and Metals reasserting their highs. The continued strength in the Dollar is also making it difficult for foreigners to justify investing in the US at this time as fund managers may feel they may have missed the boat somewhat and are unwilling to risk an investment in US stocks at the high of the dollar. With Oil higher in late trade on Friday the FTSE is likely to ignore the weakness in the States and is called to come in unchanged at 5527-29 and the DAX a little lower at 5302-04.

There are almost no corporate announcements today which should make for a slow opening but holders of Virgin Stocks will be feeling a bit happier this morning with the shaers likely to jump at least 20% this morning.

Currencies will be opening sharply changed over night with the Yen taking most of the pain. Sterling and Euro are now at their highs versus the Yen for over 6 years and the Dollar is now close to three year highs at 121.88. If the USD/JPY breaks through 121.88 the next level would be 125.50. USD/JPY is now at 121.27-30 up 75 pips this morning.

Cable is slightly weaker this morning at 1.7282-85 but having failed once more to break through 1.7380 (the old support turned resistance point) on Friday. There is a short term support at 1.7260 to 1.7270 but below this not much until 1.7200. The Euro is oscillating happily between 1.1650 and 1.1880 but momentum is still negative and clients are very shy of holding long positions for any length of time. Euro is at 1.1691-93.

Oil, as mentioned earlier, has broken out of the 56.50 to 59.00 range and is now trading at 59.80-86 up 50c over the weekend. Clients went long on the breakout at around $59.00 and are now happily sitting with their profits willing to let it run until the trends tell them otherwise. Unfortunately Gold is a different story with dealers short below $500 and 'hoping' that there is a pull back to let them out. Gold is up again this morning at 506.2-506.8 which will be adding to the pain.

The only figures of importance will be the per Budget report where Gordon Brown will attempt to explain away why he continued to spend 'OUR' money on the assumption of 3 to 4 percent growth when all the indicators told him otherwise. We will now have a nice little swathe of minor tax hikes to look forward to next year. The high street could be in for a long cold 2006.

Back to the races we go with every major equity market showing strong positive movement after the disappointment of Wednesday. The FTSE is called up about 20 points this morning at 5505-07 and the Dax up 30 at 5296-98.

Wednesday's move in hindsight was an obvious shake out of weak long positions and the quick rebound will give bulls renewed hope of moves towards new highs. The Dow 11000 level beckons dealers as a kind of El Dorado ... Dreamed of for several years but forever tantalisingly out of reach. Wall Street is quoted at 10910-14 this morning so 'only' 90 points from the level. Given that the Nikkei has added some 450 points in two days there is obviously a positive momentum which bears are finding difficulty in opposing.

Vodafone has been downgraded by CSFB analysts which has meant that one of the biggest shares in the FTSE has clean missed out on the recent rally. Clients continue to buy the stock in defiance of recent movements (or recommendations) and whilst the share continues to remain just above support at 125.00 the opportunity for a bounce cannot be ignored.

There is very little corporate info today but this is normal as it is the famed Non Farm Payroll announcement from the US at 1.30 this afternoon (the non farm always comes out on the first Friday of the month). Expectations of a figure around 200K would bolster the current outlook but in the current frame of mind it would take quite a poor number to deflate the bullish mood.

FX markets are slow this morning with the Dollar trading around the highs of yesterday. The rate hike in the Euro had very little effect as Trichet pronouncement that there was a fair amount of dispute over the move makes further aggressive tightening unlikely. The Euro is now at 1.1710-12 ( Capital Spreads is now quoting this 2 pips wide) off 20 overnight. And Cable is at 1.7281-84 off 21. Clients are pretty mixed but very active today the general view is slightly positive on Cable but should mid term support at 1.7260 fail then we will find more selling coming in.

Gold was the 'Star performer' yesterday (much to our clients dismay) smashing through the $500 level to now be trading at 503.5-504.1. Presumably the shorts set up by our clients were reflected across the world as the Bear squeeze pushed us $10 higher yesterday. The old saying 'Short and Caught' came to mind with a vengeance and rather than cutting out and going with the flow dealers have sold more into the move. Oil was positive but unspectacular yesterday with a steady move higher. We are now close to the top of the trading range at $59 and a few longs are taking profits. January Nymex is now at 58.33-39 down 10 this morning.

Strong volumes leave IG confident

Spread betting firm IG Group said it has continued to experience strong volumes with all areas of the business delivering growth, leaving it confident of its prospects for the current year.

In a trading up ahead of January's interim figures it said its largest division, the UK financial operation, has achieved strong growth driven mainly by high levels of client recruitment.

The Australian business continues to demonstrate rapid growth, it added, while the new Singapore operation is expected to start trading in January next year.

"This office is unlikely to contribute materially to the profits of the current year, but is an important step in establishing a presence in Asia and broadening IG's international reach," it said.

IG also continues to develop its unregulated product range including a simplified form of binary betting specifically designed for the sports market, planned to launch in the final quarter of the financial year.

IG's interim results for the six months to 30 November will be announced on 23 January.

Capital Spreads Market Commentary

Ouch! Markets drifted all day with the FTSE finally settling some 60 points lower the CAC off 40 points and the Dow about 80 off whilst the Dax ignored virtually everything going on and finished pretty much unchanged (a touch down). This morning everybody appears to be in rather a better mood with the FTSE called up 10 points likewise the DAX and the Dow up 40 at 10840-44. No doubt another 200 pip rally in the Nikkei has given a bit of a push as well. Early call on the FTSE is 5430-32 but we are getting early buyers at this price no doubt hoping for a reversal of some of yesterdays w