Financial Spread Betting News

London-based spread-betting company earnings rocket

Financial spread-betting company London Capital Group has seen profits soar in the past year according to results published this morning.

The operator of the Capital Spreads website said earnings before interest, tax, depreciation and amortisation (EBITDA) rose 144% to just over £4m (US$7.9m) on a turnover that rose 78% to £8.65m. Operating profit rose 142% to £3.87m. The company announced a maiden dividend of 1.7p.

Frank Chapman, chief executive said the company was “very happy” with the results. “We were given a tough target by our brokers and we did it.”

He added that the company had benefited from rising equity markets over the year. However, he added that clients were more comfortable with going short when betting on indices, currencies and commodities. “It is a huge leap to go negative on shares, but with markets like the indices it is just a number.”

Capital Spreads saw live spread-betting client accounts increase 95% over the year to 8,708. The company said active accounts percentage over a month – that is accounts with at least one transaction in the past month – had stayed steady at over 30% while the three-month active percentage remained at over 40%. The company said it had seen average trades per quarter rise 115% to 278,000.

Chapman said he hoped the company would see more growth in Europe in 2007. With the introduction of the EU’s Mifid rules in 2008, Capital Spreads will “have the passport to enter the French and German markets”. Capital Spreads already has French and German language sites, as well as a white-label deals in Scandinavia, Greece and South Africa.

Capital Spreads Market Commentary

Yesterday’s drop in the FTSE suited our clients down to the ground and the sound of profit taking could be heard across our dealing desks.

Due to the late US rally in gold and oil the buyers have come in with a vengeance on the off. Fortunately for CS clients the FTSE is quoted all the way through to 21.00 so that many were able to get long during the evening session.

The market is opening some 35 points up on the close and traders are wondering whether the last few days has been the profit taking set back (small though it was) that will enable further progress. We are quoting the index at 6396-6397 and are finding few sellers in early activity.

Oddly enough the American markets do not appear to be getting in on the act this morning as with the Nikkei up 200 points the Dax and FTSE up 40 points we are still quoting the S&P and Dow at pretty much the closing levels of last night. The word out in the markets is that the US dealers are focusing on inflation fears once more after closer analysis of the CPI data yesterday has thrown up possible pressure.

Rentokil have disappointed once more with profits on continuing business down 6% and a statement saying that current years income will be in line with last. Not exactly a growth story. The shares are likely to come in around 8p lower.

Hanson reported record earnings in what was probably the worst kept secret of the week. Net revenue was up 11.6% on turnover up a similar amount to £4.1bn. The shares have already had a great week capping an impressive six months and stand at an all time high of around 836p. Talk of consolidation will not harm market expectation either and clients are cautiously buying small stakes.

In the FX markets the dollar continues to oscillate around against the Euro and Pound, today managing a rally in early business to stand at 1.3096-1.3098 and 1.2472-1.2475 respectively both down about 0.3%. Against the Yen it has also moved higher but this is more in line with the general weakness of the Far Eastern currency. The rate hike in Tokyo of yesterday morning is now merely a forgotten memory as the (very) brief rally has been replaced by continued selling.

The Dollar stands at 121.09-121.11 against the yen only a little below the massive resistance of 121.88 to 122.18. There will be some solid Call shorts set up around these levels and a break through here could swiftly gather pace.

Gold reversed the $12 buck fall of Tuesday in spectacular form recording a $21 dollar rally yesterday on inflation fears. We even briefly popped above 680 in late trade before settling at $679.0 at the close. This morning there is a small sliver of profit taking from our clients but (as in previous comments) they remain solidly long and continue to pick up positions on any weakness. Today sees the price just a buck or so lower probably on dollar strength but the trend is still with the longs.

Oil also had a good day with Nymex breaking above $60 to hit a high of 60.56 before the last half hour brought us back to close at the $60 level. This morning sees some selling pressure but as with Gold our clients are seeing any sell offs as buying chances. Nymex is 45 cents lower at 59.63-59.69.

From reading the newspapers this morning you would have been forgiven for thinking that the end of the world was nigh.

The ‘Fear and Greed’ (sic) index is apparently at an all time high, global liquidity is going into hyper-drive, investor expectations are at a high and Elvis was seen serving donuts at a drive through cinema in Des Moines, Iowa. OK that last one was not true.

The only problem with this apocalyptic scenario is that, actually, equity multiples do not look that strained and whilst we are at all time highs in the Dow and six year highs in the FTSE S&P and Dax you could hardly say the rally has been excessively dramatic. In fact one of the strange things about the entire rally in the equity markets is how orderly it has been. Gone are the regular 200 point trading ranges in the Dow (there have been four in the last year 2 up and 2 down) and even plus 100 points is becoming quite infrequent.

With the prospect of a peak in rates on the horizon it would seem to be a strange time to be ‘crying wolf’. There appears to be a fear that any further rate hikes will de-stabilise the markets but investors are aware that there is a good probability of another hike from the Fed and maybe two from the BOE and EBC.

This said there is always the possibility of a ‘correction’ in the markets as traders decide that enough is enough for the time being. The correction in May last year took 10% off the FTSE in just a few days. Hindsight tells us that this drop was unsustainable but the losses made by investors over those few days took five months to repair.

This morning sees nervous traders sell off the FTSE on the open with opening levels down 10 at 6435-6436. The first of the big banks report today with Barclays breaking cover to announce profits just ahead of expectations at £7.13bn (a nice little bounce for the government who will pocket some £2bn for errr ..ummm... doing absolutely nothing at all). No doubt the usual knee jerk reaction from professional rabble rousers will accuse them of profiteering but the fact remains that the big four pay more in corporation tax than they profit from retail clients.

The shares are likely to come in slightly lower on profit taking but overall the numbers are good and are sweetened by a positive outlook on problem/bad debt levels.

Cadbury have also come in with annual numbers which were down at the bottom end of expectations. The reaction is likely to be muted because the problems driving down net revenue are of the ‘one-off’ variety.

FX markets are pretty much back where they were on yesterdays comment. Sterling went lower on perceived BOE dovish outlook but this was reversed in late trade. The Euro also looked weak but in the absence of any US follow through shorts were forced to cover late on and took the cross rate up to highs of 1.3190 last night.

In reality everything looks remarkably quiet (he says just before the s**t hit the fan!) with our client neatly matching bulls and bears across most of our currency pairs.

Oil and Gold are equally peaceful with little to disturb the tranquillity. The BBC last night seemed to be indicating that the US was on the verge of an air strike against Iran (!!) but in the absence of even Mr Blair backing him up Bush is unlikely to want to go down that route just yet. The fact that the US military has plans to attack anyone is completely immaterial. Virtually every major military in the world will have plans in place to do all sorts of unbelievable things. Making feasibility studies is what certain units are paid to do. Oil is now at 58.36-58.41 (April Brent).

With the US off for Presidents Day the markets are unlikely to be particularly interesting today. In general US holidays fall into two (very different) camps. Occasionally the lack of liquidity causes huge price moves as dealers hunt for support and resistance levels and the lack of volume causes stops to activate more stops which then hit more in a sort of rising crescendo of disaster. With so little actually happening today this is not likely to be a problem for this particular session.

The FTSE is opening higher again as we move into the week where the major banks release their annual numbers. The Boards of the various banking giants know that the are on a hiding to nothing as the Government, the Beeb and various knee jerk newspapers will fulminate about ‘excessive profits’, ‘charges’ etc etc. There will be calls for a windfall tax (as if the government could possibly spend the money better than the banks and their shareholders) and all sorts of regulatory pious speak. In the meantime the Chairmen will put on their tin hats, bunker down, and wait for it all to blow over.

The Call on the FTSE is 6431-6432 up some 10 points but we are already seeing some buying coming through. Our clients have been setting up shorts whilst the FTSE has oscillated above the 6400 level but this morning we are seeing some closing of these positions (for small losses) as punters decide on a more wait and see posture.

The Dow is closed today but the S&P futures are open until 16.30 this afternoon and we are seeing some reasonable buying here as well.

There are no numbers of consequence today with no major corporate figures and no economic data releases due until Wednesday.

The FX market is the only, probable, arena where something may happen in the absence of the Americans. There is some talk of large dollar buying taking place this morning with the Euro being sold down from early morning highs at 1.3160. At the current price of 1.3139-1.3141 we are just at the level above which we have failed to close three days in a row. This is building resistance which may indicate a dramatic move in either direction is imminent.

Gold has snuck back above 670 bucks again this morning with buying in the far east taking us higher on the open. Our clients continue to buy any dips in precious metals as speculation rises about a move to new highs. Gold is now at 671.2-671.8.

Oil has moved up to the top of the trading range so (with recent history in mind) our clients have started to sell heavily. Over the past few weeks the market has moved from 58.00 to 60.00 in the Nymex on eight separate occasions. The current price is 59.58-59.64 down 26 cents.

Cantor's Former Spread-Betting Head Sues Firm for $30 Million

Cantor Fitzgerald LP is being sued for as much as $30 million by the former head of its U.K. spread- betting business, in a dispute over Cantor's plans for the lucrative division.

Lewis Findlay, who helped set up the Cantor Index unit six years ago, claims he was wrongfully dismissed by the company last January. He's now pursuing two separate lawsuits to protect his stake in the business and says he's entitled to a multimillion dollar payout for the money he would have made if it's sold or listed on an exchange.

It's the second time Cantor, which lost the majority of its U.S. staff in the Sept. 11 terrorist attacks, has been hit with a big-money employment lawsuit in Britain. Steven Horkulak, a former London-based broker, was awarded 795,000 pounds ($1.5 million) in 2004 over his claim that he was bullied into quitting by Cantor's Lee Amaitis.

Findlay's case, which had a preliminary hearing today at the High Court in London, centers on a so-called incentive agreement he signed in 2003, entitling him to share in the proceeds of a successful sale or share listing of Cantor Index.

'We believe the claim is without merit and we will robustly defend our position,' Cantor's London office said in a statement.

Bonus Payment.

The company specializes in financial spread-betting, which allows traders to gamble on the movement of share or commodities prices, without the tax and disclosure obligations of share ownership. While Cantor last week announced plans for a $460 million initial share sale of its BGC Partners Ltd. brokerage unit in the U.S., it has retained ownership of Cantor Index.

Findlay claims that his stake in the company would be worth between $20 million and $30 million, given an estimated market valuation of between $200 million and $300 million. He's also seeking his bonus payment for 2004 and compensation for alleged damage to his reputation and employment prospects, according to documents submitted to the High Court.

Cantor denies wrongdoing and today argued that the court should strike out most of Findlay's claims relating to the incentive agreement, on the grounds that he knew the risks of leaving the company and that there was no breach of his contract.

Findlay's second claim, filed at a U.K. employment tribunal in August, has been temporarily postponed pending the outcome of the High Court case.

A full trial on the claim is scheduled for July.

Capital Spreads Market Commentary

This morning kicks off on the soft side as traders look to take profits after the solid run of the last few weeks. Fridays are always considered to be the favorite for pull backs and a day which also combines absolutely no data at all, is a half day in the states and precedes the long US weekend due to the Presidents Day on Monday would appear to be a ideal candidate for some pulling in of horns from the bulls.

The FTSE is some 10 points lower at 6421-6422 which means precisely nothing at all with most of the drop in the mining stock after the small draw back in metals (copper excepted) overnight. The deep drop in retail sales yesterday was a definite slap in the face for rate hawks as the recent few hikes would appear to have had a much more serious effect than expected. If future figures reflect these numbers the rate hike of last month could prove to be one of the shortest lived on record.

Traders are now almost surfeited with good news as the markets continue higher virtually every day. The slow grind up squeezes bears excruciatingly as the indices never quite move sharply enough to warrant closing out but on the other hand always hold out the prospect of a swift retracement.

The Dow moved to a new high again but this morning is quoted down 20 points at 12740-12744 and it looks like we are going to have repeat of nearly every move over the past eight months where the index moves higher followed by a contracting trading period of 4 to eight trading sessions the (occasionally) a small sell off before another rally to new highs. This pattern has been so consistent that it almost looks like a design. All news is being taken with rose tinted glasses as in the 2001 to 2003 period all news was taken badly. This may appear odd to many outside spectators but the fact is that almost all economic news can be taken in two ways. For instance a falling inflation rate may be taken as an indication of a weakening economy OR it may be taken as an indication that the Fed will be easing rates. Both arguments will move the market but n different directions. At the moment the markets are always looking at the beneficial answers which is why no matter what the number buyers come in after the initial knee jerk reaction.

Only Go Ahead group came with data this morning and these were real humdingers with revenue surging by 35% (in part due to new franchises) and pretax profits up from 41m to 46.9m. In typical city fashion the shares are off this morning as analysts ponder the margins. A 35% revenue increase only giving a 15% increase on the bottom line. The shares are opening at 2344 down 6p.

In the currency markets the fall out from the UK retail sales continues to bite with sterling now giving up the entire rally of the previous few day. The rallies in the pound are getting more and more difficult to maintain and our clients are not exactly leaping forward to buy. Trading this morning has been heavy with sellers in early trade now sitting on solid profits with previous comments a close below 1.9440 would be taken as an indication of a break of the medium term uptrend and although we have traded below this level in the past few days we have failed to actually close below it. The current price is 1.9490-1.9493.

The Yen has stabilized at 119.50(ish) this morning after solid gains against the dollar and Euro. If the cost of carry trade re-emerges then we will be looking at a swift return to Yen lows but if the outlook suddenly starts to look more Yen positive there are a huge number of Yen shorts out there to be neutralized. Any further deterioration in the calculations may bring a massive move in the Yen's favour.

Oil fell a dollar then rallied a dollar yesterday with our oil clients making hay in both directions. Opposing market moves in black gold has become almost de rigueur at the moment and out oil traders are having a ball. This morning we are at 57.30-57.35 in April Brent.

Another Day another high.

The Dow, Dax, S&P and FTSE all moved into new territory yesterday with highs being recorded across the board. Mr Bernanke's dovish comments over the state of the US economy and the likely path of inflation sent investors into raptures. At the same time the BOE was giving another warning over rates in the UK after the inflation numbers on Tuesday suggested that the worst might be over. Two converging opinions from two relatively new governors. The net effect outside of the equity rally was to move the dollar down and sterling up.

This morning sees the FTSE being called slightly off from the close last night as Oil and Gold slipped in late activity and BP is likely to come under pressure once more as Gazprom (the Russian Government) seems to have decided to unilaterally rewrite legally drawn up contracts which would remove one of the Jewels in their Crown (the Kovykta Gas project) from their portfolio. The early call is 6415-6416 down 5 points but still (when all is said and done) above the 6400 level. The Dow is at 12740-12744 finally closing above the 12675 level where it had failed seven days in a row.

The Dax is maintaining its 550 point advantage on the FTSE although with Metals and Oil looking better in recent weeks the UK index must be hoping for some narrowing of the underperformance which has dogged the last year.

Pendragon is expected to announce a 12% increase in profits this morning. The shares have recently rallied after a poor time over the end of 2006 and investors will be hoping for a return of the aggressive expansion that took the stock up to 131p last year before the failed bid for Lookers'. The stock closed just below 100p after an initial surge had taken the price to 101.

FX markets are being pushed around by the Yen this morning after economic numbers from Tokyo seemed to suggest that finally there may be a pick up in activity in Japan. The Yen has rallied 98 pips over the dollar, 124 vs. the Euro and 165 against Sterling since the close last night.

For once the carry trade has proved to be the wrong position to have. There are huge short yen positions built up across the globe and if the perception takes hold that the Yen is making a comeback the price shifts could be brutal. That said we are still very much in a bear market for the Yen and only a close below 116.50 would indicate a failure of the medium term bull move. There is very strong support at 119.75-119.85 which if broken may open the way to a swift pull back to 118.00 and 116.50.

Mr Bernanke's comments hit the dollar yesterday and this morning sees a continuation of the greenback selling. Sterling is at 1.9647-1.9650 a swift return after the drops of recent days. The pound is now pretty much in the middle of its last three month trading range having held the 1.9440 closing support mentioned a few days ago and bulls will be looking for higher closes to attack the 1.9720 resistance level.

As speculated Oil retraced the trading range (yet again) by giving up the rally of Tuesday. This makes the seventh time in ten days that oil has merely reversed the previous move and clients are getting into the swing of things selling on the open yesterday and buying on the close last night. The market is slightly lower this morning at 57.79-57.85 (March Nymex) and buyers are coming in on the off looking for a repeat (mirror) performance.

Compagnie Financière Tradition sells TradIndex

Tradition is to sell Monecor which operates the financial spread betting site, Tradindex, catering to private investors. The sale is subject to regulatory approval from the FSA.

With a presence in 20 countries, Compagnie Financière Tradition is one of the world's three leading interdealer brokers of financial products (money market products, bonds, interest rate, currency and credit derivatives, equities, equity derivatives, interest rate futures and index futures) and commodity-related products (precious metals, energy and environmental products, and pulp and paper). Compagnie Financière Tradition is listed on the SWX Swiss Exchange (CFT).

Capital Spreads Market Commentary

This being Valentines Day we can forgive dealers for feeling a bit frisky this morning. Markets are pressing to the up side as the FTSE and Dax ponder the possibility of new highs. Traders in US indices are taking advantage of the continued ebb and flow to just oppose any directional move in anticipation of a retracement over the ensuing trading sessions.

As mentioned the FTSE is at a new recent high (by recent I mean 5 years) as the bounce in metals and oil is finally helping the index higher rather than hindering it. As an indication of what a drag oil stocks have been on the index if we had just removed Shell and BP from the calculation back in April last year the FTSE would now be some 350 points higher.

Billiton (up 20% in the last month) Rio and Anglo are all looking a good deal perkier than of late as Metals recoup some of their losses and push for new levels to the upside. Gold is now back at $670, silver above $14 and Copper moved up 1,060 cents yesterday to 2.5840 after finally breaking through the downward trendline.

The FTSE is up 10 today at 6392-6393 but our clients continue to sell into the rally whilst buying the individual stocks. The index has reached here twice in the last week or so but both times have proved abortive with investors needing some concrete reason to buy at these levels. The new inflation figures yesterday may give just such a trigger but the overall feeling of wondering if there is something nasty just around the corner seems to pervade perspective. Clients will be hoping for just such a pull back but we are poised for a nasty little bear hunt if the markets can push above 6400.

The Dax, like the UK index, is poised at the recent highs of 6922 which have proved to be something of a high tide mark. A break through will bring pain to the short holders who may be tempted to cut losses and fight another day.

888 came with a positive trading statement, although with no news of the putative Ladbrokes interest. Revenue for the year was up but the breakdown showed just why the US market was so important. Even losing out on the last 3 months of business US net revenue was still 45% of income for the full year. The shares are up around 3p at 113.

In the FX markets the pound has swiftly rebounded from the inflation figure induced sell off. Currently at 1.9522-1.9525 it is up 50 pips overnight and is now actually higher than before the data release yesterday. The short term intra day charts show a stair case effect where in-between data numbers the market rallies interspersed with big sell offs on the numbers. Bulls will be hoping for a close above 1.9525 to close higher than yesterday highs or at the least above 1.9480 the nearest major support level.

The Euro has finally moved to the upside away from the 1.30 pivot area and is currently looking strong at 1.3089-1.3091. This is outside the recent trading range but we as with sterling we need a close up here to negate the recent palsy. Against the Yen the Euro is probing for new highs once more as the carry trade moves into play again. At 158.40-158.43 we are just 50 pips off the highs recorded on Monday. There has already been an attempt to this high in early trade and Bulls will be hoping that this will not be seen as an abortive move.

Oil did it by now usual reversal of the previous move. Black gold has now traded the same 250 cent range five times in the last 8 days this is impressive volatility (or maybe just a bit of schizophrenia) in anybody's language. Clients are now short, obviously looking for a sixth leg to take us back to $57.40 (March Nymex). A close above $60 could indicate further buying but for the time being playing the range seems to be the game.

Boredom might shorten this comment as markets continue to stagnate. Wondering round to our dealing desk was like entering a particularly holy mausoleum.

The FTSE is opening slightly higher on (well actually I am not sure) errrrr.. more buying than selling. The index has closed in a mere 10 point range for four days in a row and the contraction of price action has traders on tenterhooks as to which way the break will come. We have had an attempt to the down side (Thursday) an attempt to the up (Friday) and yesterday a beautifully neutral trading pattern with the market closing bangs on the Mid point of the action.

The quote is at 6361-6362 up about 10 points but the move is broadly based and not dependent on any particular sector although on the downside property stocks are under pressure with Liberty off over 2% at 1296p as British Land, reporting a tripling of profits also made a slightly downbeat statement on the future of house prices, slipped 36p at 1643p pulling Land Securities, Slough Estates and Hammerson down in sympathy.

The problem for the house builders is the lack of land available for their product. Up to now profits have been driven by the fact that by the time they come to build on their various land banks the price they can demand for a finished property is some 15 to 20% above what was expected. If this inflation tapers off and they are unable to acquire more land for building (at a reasonable price) profits will be squeezed.

The Dow had another attempt to go lower yesterday but the effort appeared too much to force us any lower and enough buyers drifted in on the falling prices to hold at 12520 support and push up into the close. This morning the index is 20 higher at 12580-84. For bears this is a worrying time as the price action looks almost identical to all the other small pull backs over the past 7 months, a contracting few days followed by two or three down days and then back to the races.

In the currency markets the lack of any interest rate activity to make some decisions over seems to be causing some stratification in the markets with the Euro stuck in the 129.80-130.00 region the Yen oscillating around 121.00 to 122.00 and even sterling reminding us that occasionally the pound can be reasonably stable.

The dollar is showing signs of some small weakness this morning with the yen rallying 50 pips to 121.45-121.47, sterling rising 25 to the 1.95 level and the Euro as mentioned back in the pivot point of 129.80 -130.00 at 129.93. Frankly I am getting a bit tired of commenting on the Euro as for the past five weeks we have very gently made nice little sine waves around this point. This compounds the rather larger shifts of 2006 where 1.2980 was first heavy resistance and then heavy support.

Oil had a spectacular fall out of bed in heavy trading yesterday and it is nice to actually have something interesting to talk about. Our clients were heavily short (and to be honest 'caught') going into the opening session but the dramatic drop of 250 cents put a smile on faces and a wedge in the pockets. Clients have now come out of the shorts and are waiting to see if the 55.80 support holds (March Brent) before committing to any further actions. March Brent is now at 56.12-56.17.

Gold followed the rest of the markets into hibernation were we remain this morning Bulls are looking (not unreasonably) for a continuation of the rally with an initial target of 677 (the high of the failed bounce in July last year) and then the potential of a return to the $700's. Bears on the other hand are taking comfort from the inability of traders to take us higher over the past few days and are looking for a return into the heavily traded 620's. The bulls have the trend very much in their favour as, since the 8th Jan the market has been solidly upward.

The fall out on the Dow and S&P has not been taken up in earnest by the Europeans this morning as traders take every opportunity to buy on any dips. Clients are once again in two minds with sellers or the index competing with buyers of the individual stocks. This has proved to be a fertile strategy as winners outweigh losers this month by some £250K.

The FTSE was called down about 25 points on the open but almost immediately the Futures saw buying which has taken us up to just 12 off at 6369-6370. The Dax (which trades until 21.00 in the futures) followed the US markets down on Friday night is opening slightly higher than the evening close of 6870 at 6880-6882 but this is still some 30 points off the 4.30 European close. As mentioned we are seeing increased selling in the indices as the markets continue to hammer at the higher levels.

Looking at the chart for the Dow we can see a huge resistance building up at 12670 to 12680 with the level forming the closing price for three of the last eight trading days and the high region for five of them. Even though we have spent all eight days in this area not once has the index managed to actually close above it. Friday seemed to be the straw which broke the camels back as the index failed at this level again and then moved sharply lower in evening trade hitting a low of 12540 but even in this we have now bounced back some 50 points and are trading at 12593-12597 in early activity today. Once more buyers are keen to come in on any falls and in the absence of any startling bad news the long awaited 'correction' does not seem to be with us just yet.

Newspapers today were full of the fact that missed estimates from US corporate releases are now at a two year high but even so are still reasonably high and when you factor in the very high expectations for those earnings it is, perhaps, not surprising that there have been some disappointments.

First Choice holidays has taken a bath on the agreed merger between Thomas Cook and My Travel as the prospects of a buyout now appear unlikely. The shares have opened some 50p lower at 250.3-251.3.

For all of the bad press over the price being paid for Sainsbury as journalists and outsiders continue to try to find what it is in the assets of the company that can possibly make 36 times this years' expected earnings seem like a good deal the shares remain on the solid side. With the rest of the FTSE looking slightly tired the shares are actually on the up this morning at 511.5-512.5. If the number crunchers in the private equity firms see value then you can be assured that there is something that is being missed.

On the FX front there is little activity this morning after an attempt to take the dollar lower in early far eastern trade was slowly pegged back. The Euro (Yawn) remains welded to the 1.2980-1.3000 region and trading volumes in the Euro are now sinking away as dealers focus on Sterling and Yen.

The pound appeared to be on the rebound this morning but selling since the European open has pulled us back below 1.9500. As mentioned on Friday punters will be looking at the 1.9440 support for indications of further weakness whilst bulls will be eying the 1.9730 resistance area. For all the headlines in the newspapers, aside from the odd few days, the markets have spent the last two and a half months between these points. Look for a nice little battle developing if we sink to the support level which if broken will open the way for another go at 1.9300 and then 1.9185.

Oil markets may be a tad quiet (volume wise) this week as the annual IPE junket gets underway. Whilst the big boys are away we may find the mice come out to play and we could get some solid swings on low volumes. With the March Brent Oil markets rejecting the $59.60 level in late trading on Friday we are getting continued selling this morning and the price is off 80 cents at 58.12-58.17. Punters are short and looking comfortable.

Gold is off slightly but still looking happy above 660. With the news all seeming to be oddly negative (for no very good obvious reason) investors are putting more and more into the 'great protector' that is considered to be the Yellow Metal. With no real return on the investment the price must continue to rally to give income. With the Yen showing what can happen even when everything (apart from the income) is going well bulls will be quick to liquidate on a reversal but for the time being our clients are long and happy. Current price is 663.2-663.8.

Cantor launches first financial spread betting exchange

The financial bookie Cantor Index has launched the first financial spread betting exchange alongside its long-established sports exchange.

The exchange allows retail punters to trade against each other on the daily movement in the FTSE 100, property prices and interest rate decisions.

Like traditional spread bets, punters have to decide to either "buy" the spread if they think the FTSE 100 will close higher or "sell" if lower. Winnings or losses are calculated by the size of their stake multiplied by the number of points higher or lower than the spread.

Because the prices on Cantor's Spreadfair exchange are not determined by the bookmaker - instead being set by the people who bet - the difference or spread between the buying and selling price is minimal. However, Cantor will charge winning punters commission of between 3 and 5 per cent on their winnings at the end of any trading day.

For example: If a punter bought the FTSE 100 for £10 a point at 6211, they would have made £265 if the FTSE closed at 6227.6. The winnings are 26.5 points multiplied by £10 stake to make £265. However, selling the FTSE at 6211 would produce a loss of £265, although there would be no commission charged.

The minimum bet size is £1 a point, and like any spread betting product losses are potentially unlimited. However, the exchange enables users to close out their positions before the close of a trading during the day to either bank a profit or crystalise a loss.

The company plans to add bets on Wall Street and the gold price in coming months, and is in talks with FTSE, which compiles the FTSE 100 index, and the London Stock Exchange over introducing bets on single shares.

Because the winnings are considered as gambling profits they are free of tax, and there will be no stamp duty to pay when the bets on individual shares are launched.

Andrew Garood, recently made joint managing director of Cantor Index, said: "We believe this to be a revolutionary product for the retail investor, who can now gain cost-effective exposure to movements in the FTSE on a daily basis.

"One of the good things about the FTSE is it reliably moves every day, but unlike in some sporting events, such as cricket, the spread does not move so much that you get absolutely cleaned out."

He added: "Betting exchanges have grown exponentially in recent years and yet until now there has never been a way for private investors to establish easily the price at which they are prepared to trade or to take a price which they are comfortable."

IG launches Education Programme

Spread-betting outfit IG Group has launched a new client education programme, TradeSense, in an effort to slash the 'surprisingly large' number of clients on its books who open accounts and never trade.

Although the firm is seeing strong client growth and activity level numbers, chief executive Tim Howkins says that 40% of people who have spread-betting accounts with IG never actually bother to trade. He attributes this to the 'misplaced concern' that trading is difficult among those new to spread betting, in addition to a significant number who give up early after suffering a few losses.

Aside from helping to reactivate some of its dormant clients, Howkins believes TradeSense will help improve IG's client recruitment rates. TradeSense is a six -week course and clients using it will be able to place bets that are far smaller than our usual, enabling newcomers to build up stakes gradually as they become more proficient and self-assured.

Over the six months to 30 November, IG saw profits rocket 45% despite a 'significant' increase in its IT and marketing spending. The firm currently has £27 million of surplus regulatory capital on its books and, according to Howkins, up to £20 million of that could be returned to shareholders. He says that if IG has not done anything with that cash by the time its full-year results are released in July, it will look at ways of handing the cash back to investors.

Capital Spreads Market Commentary

Today is starting on the positive side after the US managed to recover from the mid afternoon drop and the Dow eventually closed down just 30 points having been over 100 off at one point.

The Dax is currently above 6900 with the next obvious target being the 7000level but the index (as with all the majors in Europe and the States) appears to have run into aa glue pot. Whilst we are not going down we are also not going up and the 21.00 closing levels over the past six days have been covered by a 30 point blanket. For the Dax as with the other indices this is normally a signal that we are about to break for a new level (either up or down). As mentioned the 7000 level beckons to the upside but conversely the support is seen at the volume area between 6670 and 6755 where we spent a hairy few sessions back in mid January. The call this morning is up 35 at 6911-6913.

The FTSE is also 30(ish) up at 6377-6378 slightly higher than expected on the open. Dealers were calling for the high 6360's but shorts appear to be being squeezed out at the moment.

Today sees very little information anywhere with no major corporate or economic announcements so dealers will have to work on speculation, fear and previously announced data.

HSBC does not appear to have suffered too much from yesterdays 'profit warning' and in fact the shares have, in the past, had much worse days on ostensibly good news. The shares are supported at the 905p level and traders are unhappy to be seen selling below this level. I suppose on the argument that it won't go down on bad news then the only direction is up!

With Oil and Metals rising once more the Oil and Mining sector has been the power behind the rally today with Billiton up another 10p to 1041.0-1042.5, Anglo up 18 to 2466.7-2470.3 and Shell at 1720.1-1722.9 up 12p.

In the FX markets the pound is retreating fast and is now back at 1.9509-1.9512 down 80 pips this morning having been well above 1.97 yesterday morning. The effect of no move in the UK base rate had sellers coming in from all angles and our clients certainly followed the rush building up large Cable short positions throughout the trading session. We had a strong trendline support at 1.9560 but when this came under pressure at 07.00 this morning it wilted and dealers are now looking at 1.9480 then 1.9450 and below here 1.9300.

The Yen is not exactly following through from the central bank buying of last week with continued weakness against the dollar and euro. With the swift bounce from the major support at 120.00 the dollar has made up most of the drop and is now at 121.40-121.42 with the highs of just above 122.00 in sight once more. That said there is a solid resistance level at 121.69 which dollar bulls will be hoping to quickly overcome as otherwise it will hang over the market.

Oil rallied to reverse the actions of Tuesday and Wednesday and closed some $2 higher at 59.05 in the March Brent contract. Unfortunately it did not have quite enough power to attact the 59.40 level which was the traded high for Monday, Tuesday and Wednesday. Longs will be sitting on positions Shorts will be hoping that the resistance at 59.40 holds and those with nothing will be also eying the resistance level for sign of a break. The last week has seen some interesting activity where nearly all of the action has taken place in the last hour of trading. It has almost been a case of sit on your hands until you see the last half hour move and then follow it (making sure to close out at the end of business).

Gold is still clawing its way higher rallying $9 yesterday. Yet again we could not quite break above the $662 resistance but we are having another go this morning so the 676 high of July next year may be in traders sights. Current price is 660.5-661.1. Another failure here may well trigger a swift sell off so traders are sitting back and waiting for the trigger.

And so we grind ever higher.

The markets appear to be of one mind in that, if we have indeed reached a peak in the interest rate cycle, then ipso facto equities should eventually rally to give a lower yield (dividend return) to reflect falling cash and bond yields.

This is, indeed, a persuasive argument but the problem is that stocks have already built in expectations of greater profit margins/revenues/growth etc whilst a falling interest rate environment would appear to indicate that central banks feared that the opposite was about to happen.

This morning the FTSE is absolutely flat at 6346-6347 and with very little information due out today from either the corporate or the economic front we will probably see a certain amount of churn going on as traders adjust portfolios. This afternoon sees the oil inventories out of the states and we may see some activity in Oil related stocks after this but that aside we appear to be in for a quiet day. (famous last words). The rather nice little bounce from Billiton overnight has pleased our clients who, as in previous comments, have been consistently long of mining stock and, in fact, have their biggest position overall in that individual stock. The reaction of the FTSE index may appear to be a little parsimonious given the 5% move in one of it number.

The Dow is also unchanged but the charts look to be displaying that tightening up indication that in the past (over the last year or so) has preceded one of the small sell offs that always seem to be required before we can move to higher levels. Whilst the charts are still very much on the positive direction the rate of rise is (finally) starting to slacken but in truth the expansion rate from last July would be difficult to maintain.

In the FX markets the continued churning of cross rate is proving something of a pain to traders. Sterling/Euro/Dollar and Yen appear undecided as to where they want to go with one move swiftly countered by another. Looking at the charts for Cable over the past few weeks we can see spikes all over the place but the net effect has in the end been nothing. The closing rates over the past 12 trading sessions are blanketed by just 120 pips. What the markets need is some definite indication of where the various economies are going and with expectations that the US was slowing down now in some doubt traders are wary of standing in the way of any fundamental sea change in currency expectations.

For several years now the analysts have been calling for dollar weakness and whilst to some extent this has happened longer term investors are still waiting for the blow out move.

The Euro is back at the pivot point once more (1.2980 to 1.3000) yawn.... I seem to be commenting on this ad nauseam. This level seems to cause a kind of fatal attraction to dealers with every move away being eventually countered as the elastic band tying us to the point snaps us back. Since the first week in January this effect seems to be strengthening the entire trading range through this period is covered by 175 pips from 1.2875 to 1.3050. At 1.2986-1.2988 we are slap bang in the middle and looking like going nowhere. Longer term traders are sitting on their hands and waiting for a close above the 1.3050 level or below 1.2875 for some indication of future direction.

Gold continues to rebound from the fall of last Friday with dealers still remaining long. We have opened this morning on the bright side up a couple of Bucks at 655.4-656.0. Clients will be hoping for at least a test of the $662 level. If we fail to break the level again then we are likely to see some profit taking.

Oil contimues to look stronger than in recent times with the rally from Mid January still in place. Forecasts of cold weather in the states continuing for the next ten days have bolstered prices (and bulls) and we now await the inventories numbers to see whether this has had an impact on stocks. The current price for April Brent is 59.51-59.56 up 55 cents this morning.

Unfortunately my comment on Friday managed to be sent just a few minutes before the Sainsbury story hit the wires. So expectations of selling from our clients (whilst realized) rather ran into a buying spree from the rest of the market.

For all the bullish feeling over the end of the week with virtually every Euro and US index closing either at or near five year highs trade volumes appeared somewhat muted. Our clients are quietly moving out of UK equities with overall long positions now lower than at the turn of the year. In one sense this is just a reaction to some unexpected but nonetheless welcome profits triggering the usual selling but on the other hand we are seeing some of our longer term traders pocketing their dosh. The FTSE is called at around 6305-6306 but as with previous mornings we are seeing continued selling in early activity. The Dow which actually did manage a small drop on Friday is opening another 15 or so lower at 12640-12644.

This morning sees little on the news front except Ryanair confounding the markets once more with a huge increase in earnings to €47.7m against expectations of a drop to around 21m. The analysts for this sector must be wondering how they could have been so wrong. The shares have rallied 45% in the last year and these numbers are hardly likely to prompt any profit taking. Aside from the failure to acquire AerLingus (an action that cost little but has added some high profile holders of the stock at unrealistic levels) not much has disturbed the ebullient Mr O'Leary whose masterful running of an airline must be rubbing competitors' nerves raw.

This week sees announcements of one form or another from Cisco, Disney, BP, BT, ICI Astra Zeneca and Unilever but very little on the economic front so traders will have to read what they can out of single company performances.

FX markets have opened with the Yen pushing higher as the Yoyo effect of recent weeks continues. The medium term up trend of the Euro/yen is the first target of Yen bulls at 155.75 with the longer term support at 153.75 as the main target. The cross has been pushing for new highs above 158.50 but for the time being appears to have run out of steam and is slipping in early trade at 156.20-156.23.

Sterling is also looking a bit weak with traders not agreeing with analysts who have made another rate hike more probable over the weekend. Profit warnings and bankruptcies are running at highs and traders are not sure whether the Governor will be able to outvote his own team a second time. Cable, having had yet another abortive look above 1.97 on Friday is settling into the Mid 1.96's where it appears to be quite comfortable. The chart (if read in a certain light) seems to be forming a rising flag formation with the top at around 1.9800 and the bottom, currently, at around 1.9515. A break and close outside of these barriers may well be the next trigger for a major move but in the meantime the currency seems to be bound by this (admittedly quite wide) trading band. With the Yen perking up and Sterling dropping slightly the move in GBP/YEN is magnified and this morning is no exception with the cross rate off over 100 pips at 237.05-237.13 but we are still above support at 236.80 if rather below the recent 241.50 highs.

The dollar managed a bit of a rally after looking like dropping sharply after the Non Farm Payroll on Friday. The numbers were undoubtedly worse than expected (which should have harmed the dollar) but rereading of revisions etc gave confidence that the economy was still looking, if not strong, then definitely not weak. With rates already at 5.25% the US consumer appears to be happy to spend his way out of the blues. The Euro is back below 130, yet again, and the continued failure to build on supposed greenback weakness may yet trigger a sharp reaction in the other direction.

Gold was an textbook example of support and resistance trading on Friday. Initial trading took us down to the 653 support which held then the NFP release gave the dollar a nasty hit which shoved Gold back up to the resistance level at 660 (which also held). At this point the dollar started to rally and Gold dealers swiftly reversed direction but this time the 653 support failed at which point we swiftly dropped to the major $643 support. For those with tight trading discipline this made three big trading gains with only one small trading loss. Today sees the market at 647.4-648.0 in very light activity. Support is being given by the rally in the Yen this morning but longer term bulls may have been hurt by the reaction on Friday. Our clients are generally buyers of the yellow metal but recently there has been a distinct cooling off.

As commented on Friday the last few minutes of trading in the Oil contract yet again caused a major move. The market was looking like having a quiet day (finally) but in the last 50 minutes of the day Brent March rallied 145 cents as dealers decided that they did not want to be short over the weekend. As mentioned the last period of trading is becoming increasingly brutal. Today we see some of the rally being given up (again a feature of recent late market movements) with dealers obviously failing to get whatever it was that spooked them on Friday. With traders still worrying as to the effect of the OPEC production cuts we may in for a series of these closing price moves over the coming weeks. Brent March contract is 30 cents lower at 58.08-58.13.

All the worlds' indices look to be on the up after the implications of the Feds comments on Wednesday began to sink in. If the Fed is indicating that inflation may be under control there is a case to be made for rates to be lowered in 2007. Even if corporate profit targets prove to be slightly difficult to attain the revaluation of the Equity markets overall in the light of lower interest rates means that more money will be allocated to stock. At least that's the theory and the reason behind the rally of the past few days.

The FTSE is looking to open at around 6285-6286 up slightly from the close last night but we continue to just get selling after the rally of yesterday took us up to the 6300 level. As mentioned in yesterdays comment our clients were the longest they had ever been of the UK index but by the close of business this entire position had been turned round and we now find our net client position is now short!! As can be imagined it was a day of joy for most of our clients with profitable bets outgunning losers by over £120K.

The UK index is still some 50 points off the highs last week and remaining bulls will be focusing on this level at 6334. Whilst most of our clients were long Punters looking to fade the rally have been caught in the squeeze and are clinging on hoping that the 6300 level will prove to be barrier too far.

The Dax continues to outperform the FTSE with the 2007 rally in the German index now reaching 4% whilst the UK index is only at about 1.3%. This continues to compound the underperformance of last year and is caused by the squeeze on interest rates. When the turning point in the BOE's tightening phase is reached we can expect some of this differential to reverse but do not hold your breath!

The Dow hit another all time high (whilst the S&P is still some 6% off the peaks of 2000 and the Nasdaq is still under 40% of its former glory). Into all of this we will be getting the Non Farm Payroll data this afternoon at 13.30. The number is expected to be a respectable plus 150K which would be (to paraphrase a rather famous economist and fairy story character) "not too hot and not too cold". It has to be said that the markets have (for quite some time) been taking virtually all news as, if not exactly good, certainly not bad as investors have looked for the silver lining behind every data release. These things tend to run in phases which can go on for quite some time as the bear move from 2001 to 2003 showed when even good data was somehow continually turned into bad!

Anyway the Dow is opening at 12681-12685 almost unchanged overnight and we expect little trading activity before the numbers.

In the FX markets traders will be flattening positions this morning in preparation for the chaos that is the post Non Farm trading period. Most speculative 'old dealers' will have no exposure over numbers as justifying to your treasury manager why you effectively 'tossed a coin' over a major data release is normally the past-time of 'Young dealers' never destined to become old ones.

All the crosses are pretty much unchanged this morning with Cable at 1.9657-1.9660 Yen at 120.92-120.94 and the Euro at 1.3018-1.3019 and I expect these to be pretty much the levels over the morning session.

This said the Euro is holding for the time being above the major pivot of 1.2980 with no serious attempts to give up the rally of Wednesday. A confirmed close tonight will get the dollar bears salivating once more.

Gold spiked up to over $660 for the first time since the abortive Gold bounce in July last year but was unable to cling to the level and drifted down to close at $656.0, still a few bucks up on the day. And more importantly holding on to the 656.0 (bang on) support. Bulls will be confident of further progress and bears will be hoping for a break of support and a sell off. (that is what makes the markets!).

Oil had another rip roaring day first falling then rallying then falling again before rising once more to new highs on the day before finally giving up the ghost and pushing down to close at the lows. The last 20 minutes of trading (19.10-19.30 UK time) are getting to be a very hairy time for the markets. Today we are opening 25 cents up in quiet trade at just around the $57.00 level in the March Brent contract. The price of Oil has rallied over 10% in the last few weeks having fallen 20% in the previous few. Not a market for the faint hearted!

Wow! what a day.

FTSE started up with Dax and Dow down and ended with FTSE down and Dax and Dow up. Don't ask me why it just seemed that traders across the markets were matching our client activity.

In late trade buyers came in in size and we ended with the biggest client long position in the history of our company. This morning this trade has come in with bells on!! The FTSE opened some 40 points up and has traded higher in stop start activity since then. It might be thought that with the Dow, S&P and Dax at massive new highs for years that the FTSE would also be up there to be counted but we are still some 70 points off the highs of last week and this is after Oil and Metals have also had a stupendous couple of days.

This lack of performance (admittedly whilst the market is still on the up) is worrying some analysts for whom the saying 'the market is always right' is engraved on their hearts. If we are underperforming the question is why and if the global equity markets pause for breath will the UK premier index sink again?.

These questions though are for another day. The FTSE is now at 6268-6269 up 66 points with the Dax up 50 at 6837-6839 and the FTSE 250 is at 11124-11154 up 85. The 100 index is building up some impressive support in the mid to high 6100's with every move into this area being swiftly rejected. There is some minor resistance at the current levels of 6270 which will probably encourage some profit taking from short term players.

In the FX markets the Yen, as commented yesterday, is looking much healthier. If the currency can rally a little further then the pressure will start to tell on the cost of carry players and we could see a much faster pull back as Dollar and Euro longs get squeezed out of positions. Dollar/Yen is now at 120.60-120.62 some 150 pips off the highs of a few days ago whilst the Sterling yen cross is fully 480 pips off the highs of last week. Trading in the various major forex crosses is becoming more choppy by the day with hourly ranges increasing. This is generally an indicator that something big may be about to occur and traders are getting faster and faster in churning in and out of positions.

Gold performed one of those strange trading sessions where the price drifted to the support mentioned yesterday had a quick look at it and then shot up straight through resistance to record a solid gain which left us bang on the 655 resistance level from last august (and where we failed just five days ago). This morning we are still here and our clients are taking a few profits on the basis that it may not break above the line so a bit of caution may be sensible. That said our overall client position is still solidly long. The price this morning is 653.3-653.9 up 8 bucks yesterday.

Oil was bolstered by the inventories number which came in slightly weaker than expected and by a sudden squeeze on shorts right at the end of the trading day. In the last 10 minutes of trading the price rallied over a dollar to close at $57.50 in the March Brent. This morning has seen some 55 cents of this move slowly dribbled away but for the time being (and for the first time in quite a while) the bulls do appear to be the more powerful players. Moves higher are proving faster and more stable than the falls. The current price is around 56.94-56.99.

With Oil bouncing some 3 bucks yesterday the FTSE is understandably looking a bit perkier than its continental cousins this morning. The call is for some 5 points higher on the open whilst the Dax is opening around 7 or 8 lower. This is cold comfort for many of the spread market traders as the Dax FTSE differential widened by some 60 points in yesterday's activity after Siemens announced a big US contract which took the German index up some 35 points all on its own. To equate this to the FTSE, for one stock to move the index 35 a stock like Vodafone would have to move 17p.

There is quite a bit of info out this morning with Vodafone announcing better than expected customer acquisitions with 8.7m new users against an expected 5.8m. The shares are likely to open nearer to 150p up maybe 3 or 4p on the open. Corus has finally succumbed to Tata steel with the final bill coming in at 608p a share, at £6.billion the company can hardly say they got a bargain and Corus shareholders must be pinching themselves. How did the city fund managers get the bids so wrong? The shares closed last night at 565p!

BskyB may slip in early trade after reporting a fall in 1st half profits to 356m but the market can hardly be surprised as this was the number touted by analysts. Turnover was up to £2.2B but net new subscribers were lower than expected at a still creditable 183K. The shares are called off 5p at around 540.

F&C Asset Management have announced a 21% drop in funds under management will put a bit of a spanner in the share price. The closing level of 208p last night, the high since April last year, may make some investors wonder why the stock price had been so bullish last week.

The markets are unlikely to get too excited today as the US FOMC policy statement is due out at 19.15 this evening. Traders tend to ensure a flat book going into important figures and with the Non Farm Payroll due out on Friday and a plethora of other US data over the next three days there will be no prizes for getting it wrong.

In the FX world the dollar is flexing its muscles and the Yen seems to have perhaps hit the end of the elastic band. Every wave higher for the Euro and Dollar versus the yen is getting harder to maintain and with huge cost of carry positions now in place around the globe traders are wary of a sudden reversal. The problem with the 'cost of carry' argument has always been that we are vulnerable to a dramatic pull back over a few days where the interest rate advantages pale into insignificance against the intra day moves.

Dollar/Yen is now at 121.33-121.36 down from the 122.20 peak last week. Not a big move but possibly significant given that the dollar is rallying itself at the moment. With Sterling Yen hitting 240 yesterday and rejecting the level once more there is some worry that there is a lot of fresh air below the current price of 237.14-237.22. A dramatic break lower would target 230 initially and then possibly 222.

Gold appears to have gone to sleep the closing levels of the past six trading days are within just a $4 range between 643 and 647 and with the price this morning at 645.2-645.8 we are not exactly looking at anything dramatic in early activity. With the dollar looking stronger dealers might be expecting gold weakness but our punters are building up longs once more. One presumes under the basis that if it won't go down then maybe it will go up!

As mentioned Oil was the big performer (once again) yesterday. Neatly reversing the fall of Monday. OPEC once again came in with comments over production cuts but with winter now drawing to a close the impact may be muted. Today sees inventories from the states (yet another piece of data for us all to ponder) which will no doubt jerk us one way or the other. The current price of March Brent is at 55.83-55.88 off 55 cents from yesterdays close as some profit taking before tis afternoon takes place.

One of those very tiresome days yesterday where all the activity eventually amounted to very little.

The FTSE fell 20 rallied 40 and then drifted to just up 10 on the day. The Dow, Dax and S&P made pretty similar trading patterns and clients were muted in the small trading ranges.

This morning sees the FTSE called just 4 off at 6233-6235 which is not bad given the performance of Oil in late US trade and the drifting in Metals prices. Yesterday saw sellers coming into the market virtually from the off and this morning we are seeing much the same activity. The Dow is exactly unchanged at 12490-12494 and the S&P likewise at 1420.7-1421.1.

The Dow (which broke through the medium term bull trend line on Friday last week has not made any follow-through to the move and appears to be building support at 12460 but on the other hand has not managed to push back up above this line which now appears to be a good resistance level (currently at 12540). This week sees an FOMC interest rate decision and the dreaded Non Farm Payroll Numbers on Friday so we can hardly complain of lack of impetuous for whichever direction is decided upon!

Today see carpet right release trading data and the announced increase of just 0.1% in like for like sales in the UK and Ireland may give some longer term holders pause for reflection although overall sales were up 7%. The growth in Europe was much more exciting at plus 4.9% in LFL sales and plus 12.5% overall increase. Early calls are for a slight slip from the closing price of 1265p but our clients are not looking to bail out just yet.

The FX markets had one of their quietest days for a while with only one minor late afternoon rally in the Euro to relieve the boredom. This morning has started off rather more excitingly with the pound managing a bit of a spurt up to 1.9670-1.9673 on the open of European trading activity but the lack of reaction elsewhere means that dealers will probably be struggling to maintain the momentum. Traders were looking to short sterling and have been cruelly treated in early activity.

Whilst the dollar looks marginally weak this morning the Yen is yet again proving to be the loser overall. Sterling/Yen is now flirting with the 240 level once more having broken through this level last week. The Yen was not helped with further weak economic data out of the BOJ showing consumer spending falling once more. Hopes for a move into positive territory were dashed and whilst industrial production continues to grow so (it appears) does unemployment. That said the Dollar/Yen has not reacted poorly considering the numbers with the dollar taking just 15 or so pips off the price at the close yesterday. Traders will be looking at this lack of reaction and will be wondering if the Yen has finally reached a level beyond which sellers are getting increasingly nervous. The dollar is at 121.95-121.97 with the highs (recorded yesterday) at 122.20 the obvious first target. On the downside there is solid support at 121.64 to 121.45 and then 121.15.

Gold cautiously tried the upside yesterday in thin trade reaching the 'hourly' shoulder high at 647.50 before giving up the struggle and pushing back down to close just a bit lower at 643. We are currently in a 641 to 648 trading range and the break out of this could indicate the next directional play. The current quote is at 642.4-643.0.

Oil suffered (as feared) falling virtually from the open to the close with just a short 50 cent rally in afternoon trade. Brent closed 200 cents off the highs at 53.64 and is opening slightly better this morning at 53.87-53.92. In the short time since oil has moved up to these levels (remember just a few years ago we were down in the $20's) producers have become used to prices up here and have geared economies to the higher prices. OPEC may find themselves in a bit of a cleft stick where they wish to cut production to raise the price but need cash, now, to boost economic performance. In the past this has generally meant increasing production levels chasing the price down, today's (seemingly) tighter agreements may reduce this effect somewhat but do not be surprised if there is rather more clandestine quota breaches in coming months.

The FTSE had high hopes of coming in on the buy side this morning but selling has built up all morning in pre-market activity as a sense of bearishness spreads over the market. The Dow managed (yet again) to negate most of the drop on Friday by the close which should have helped the UK and European markets this morning but there is a slight feeling that now would be a good time to take some profits if you have them.

The FTSE is called at 6230-6232, which is still unchanged on the Friday close but dealers will be disappointed on the lack of follow through especially as the crucial Oil market showed strong price action to close above $55 (and to open higher this morning). The Dax is up 10 at just above the 6700 level at 6702-6704 but this appears to be under pressure as well. Sellers in early business are outnumbering buyers by 3 to 1.

The Dow and S&P are slightly off from Friday but trading is muted in thin activity. The Dow is at 12474-12478 and the S&P at 1420.8-1421.2.

Greene King (brewers of my favorite bitter) have announced that year end trading was up to expectations which will probably hold shares at the current levels. The statement was not quite so encouraging as Punch and JD Wetherspoon but in the current climate of fear over consumer spending will still be a relief to investors. The shares are likely to come in unchanged at 1074p.

Cairn Energy stated that they were confident of a suitable result from their discussions with the Indian government and traders may be looking to pick up stock in early activity. The stock has had a rough time of it over the past few months dropping from near 2150 to the current 1700p as fears over supply and contracts have filtered into the market.

On the FX front the yen has had another tough time of it after December retail sales showed a drop. The high street must be tearing its hair out in downtown Tokyo as consumers continue to sit on income rather than go out and spend it. Governments the world over have this problem, they continually exhort their public to save but (given the short term of the average elected government) secretly want them to go and spend, spend, spend and solve their problems over growth and tax revenue.

Sterling is absolutely unchanged this morning having had an attempt to the upside overnight and to the down early this morning. There is good support at 1.9555 1.9525 and the rising bullish trend line currently at 1.9460. On the top side the initial target is just 1.9600 and then 1.9640. With the current price at 1.9590-1.9593 traders may find it easier to approach the weaker resistance levels rather than the more powerful supports.

The Euro flattered to deceive last week continuously looking like moving higher versus the dollar but failing every time. 1.2875 to 1.2885 is building into a support level but all eyes continue to focus on the 1.2980 pivot point which seems to have dominated the markets for some time now. On a momentum basis the market is still bullish but dealers are increasingly feeling that the next direction is actually a 50-50 bet with 1.25 having as much attraction as 1.34. At 1.2915-1.2917 the dollar bulls appear to be slightly in the lead this morning.

Gold is stuck at 644 with bulls and bears almost matching each other on our books. For both the attraction can be seen. On a dollar trading stance the strength of the Greenback recently should indicate a falling price for the yellow metal but on a demand/supply and (to some extent) a technical charting argument there is room to hope for a decent rally. A classic market situation. Gold is unchanged this morning at 645.0-645.6.

Oil, as stated, is looking to move higher after the US had a few days of cold weather. We have been here before and the feeling amongst dealers at the moment will probably be to let the market have its run on the back of the forecasts before sellers come in again. Thursday's high's of 55.90 in the Brent March contract is the obvious first target for the bulls whilst the hourly rising support (currently at 54.50) will be attracting the bears. With the price at 55.50-55.55 the upside looks easier this morning but oil has been very contrary in the past so tight trading from our clients is expected.

My rather cautionary comments yesterday morning in the midst of all the bullish activity in the equity markets seemed to strike something of a chord as we are now sitting some 90 points off the highs. The FTSE spent much of yesterday afternoon gently drifting lower as profit taking became the order of the day. The twin bolsters of Oil and Gold which had been helping stocks in the morning went into reverse in later activity.

This morning sees the FTSE called at 6245-6247 off 25 or so points from the close. This move is mainly due to the 120 point fall in the Dow and the 16 point drop in the S&P. The US markets had recorded new all time and five year highs respectively on Wednesday and dealers obviously felt that enough was enough for the time being. The US has had a series of these pull backs whenever a new peak is reached and the Dow is rather worryingly sitting right on the rising trendline support from July last year. In the past it has rejected this support very swiftly but the inability of the market to seriously bounce from the level in the last hour of trading may give bears the opportunity for their first attack in six months.

The Dow opens pretty much unchanged at 12507-12511 with our clients who were short for all of the fall yesterday closing out positions and going long. Until technical levels are actually broken the bull momentum remains in place.

32 Red look like matching the performance of their main bill board Aston Villa with a profit warning this morning indicating that results will significantly miss expectations. From the performance of the stock over the past five months it would appear that the announcement will not come as much of a surprise. The disastrous aquisition of Bet Direct last June and the subsequent performance of the favorites in a series of sporting contests has hit revenue hard. The shares have fallen from the peak of 175 last march and are expected to open in the low 20p's this morning after closing at 37p last night.

Torex Retail have also shocked investors with a request to suspend the shares pending a trading announcement. Rumours of a profit warning mix it in with rumblings of a suitor so the suspension could be either good or bad news. An uncomfortable morning for investors.

In the FX markets Sterling is sitting pretty much at the close of yesterday and just a little off from yesterdays comments when we were at 1.9680. At 1.9656-1.9659 we appear to be oscillating between the bulls and bears with support at 1.9626 and resistance at 1.9680 and 1.9730. Punters continue to look to buy into falls which looks a risky strategy just at the moment as the bullish trend would remain in place even on a pull back to the mid 1.92's.

The dollar weakness so beloved of commentators over the past year or so is proving difficult to deliver at the moment. The Euro's continued battle over the 1.29/1.30 pivot level is developing into trench warfare but a break through may be about to be made. The medium term support comes in around 1.2910-1.2920 where we are battle at as I write. A break and close below here would bring greenback buyers back to the fray with 1.2800 and lower at 1.2485 the immediate targets.

With the resurgence of the dollar Gold is giving up some of it gains of the past few days but not a dramatic amount. The high of 654 yesterday is still within telescope range today after the market failed to break above the August 06 highs in busy activity. When (a few months/weeks ago) Gold seemed to refuse to go higher on the weakening dollar the opposite seems to be the case today with a stronger dollar performance not creating a bearish move. Bulls will be encouraged by this lack of weakness in the face of poor news. Gold is now at 644.5-645.1 admittedly $10 from yesterdays highs but looking firm in early trade.

Oil is up 50 cent this morning after failing to hold onto gains in afternoon trade yesterday. The market is starting to get very volatile again with each positive day followed by a negative one and vise versa. Our punters are also having mixed luck with good and bad days following one after the other. This morning we are at 54.61-54.66 in the Brent March contract and looking positive for the moment.

And so it goes on.

The vote from the MPC threw the equity markets into a bit of a tizzy as the fact that the Governor had to vote himself to force through the rise and that his three colleagues on the Committee voted the other way must have made for an interesting conversation.

Dealers took the vote to mean that the rate squeeze may be almost over with expectations of just 5.5% being the high rather than the 6% being touted in the weekend press. Understandably Bank shares took off as fears over bad debt and repossessions were eased and on top of this Gold, Copper and Oil looked strong (for most of the day) helping Mining and Oil companies. Trading was very busy all day with our clients long of every stock in the FTSE 100 making for a happy time for many of our punters.

The one fly in the ointment is that, assuming the MPC knew the inflation data beforehand, why was the vote so close? Given an RPI number of 4.4% strong wage inflation and a solid GDP number it would appear that the vote should have been closer to 9-0. This will leave dealers slightly cautious amidst all the whoopee.

The FTSE is called almost unchanged this morning with dealing at 6314-16 as the market struggles to build on the momentum of yesterday morning. The close in the FTSE was the highest for over 5 years but there appears to be a sconce of 'now what'. As mentioned in the past three commentaries the index has made a habit of dramatically rejecting any falls but that does not take away from the fact that the falls did happen in the first place. Daily trading ranges for the month to date are significantly higher than for any month since July but to no great effect (we are now just 10 points away from the closing level on the first day of the month) and this volatility may be causing some disquiet amongst the technical analysts.

It was nice to see the UK index finally make up some of the ground on its European bourses as the spread between them has been widening rather embarrassingly. The Dax went from 200 under to 540 over the FTSE during the course of 2006. Unfortunately it is too early to say whether this may be a turning point in the relative performances or if this is just a temporary correction. The FTSE/Dax spread is now 440 points.

The Dow took the opportunity to move higher as well rather boringly closing at a new all time high (ho hum). Even the S&P 500 managed to get in with the fun this time moving 12 points higher to a new peak at 1440.5. This morning the markets seem to be comfortably holding onto these levels and our clients are busy in two way activity.

Liberty International seems to be in the news with rumours of a bid emerging. By 10.30 the shares had traded fully three time their normal daily volumes so it may be that this rumour has rather more belief behind it than the Resolution rumour of earlier in the week.

BHP Billiton has, rather unsportingly, made an adjustment of some $200m to the downside on its first half 2006 data which has rather taken the wind out of the sails. But as these refer to past earnings they should not have much impact on current share prices. Yesterday capped a very nice five days activity with the shares bouncing from 875p up to 965p (a nice little earner for those holding the stock).

Contrary to the comments in most of the newspapers this morning the weakness in sterling was not actually because of the MPC vote or the GDP data because Sterling was already down at 1.9730 before the announcement came out there was already a technical correction taking place probably due to the fact that the run higher was more due to a bear position squeeze than anything fundamental. Once the shorts had been battered into submission we just ran out of buyers and down we came. The current price at 1.9680-1.9683 has already seen an attempt to the upside this morning with prices peeking at 1.9733 before coming off once more.

The Yen was the big mover yesterday with the Euro/Yen cross being particularly volatile. The cross dropped 175 points from 158.5 to 156.75 then bounced back 150 to 158.20 before falling 170 again to 156.50. There was little indication as to the reason for these moves but dealers are understandably nervous this morning as this type of price action is exceptional even in today's currency movements. The trading range today has already encompassed over 100 points (mainly in overnight dealing) with a low in the 155's.

Oil was also very moody. Seemingly unable to make up its mind what it wanted. We ended the day just 20 cents higher (where we open this morning) but during the course of the session yesterday we endured several sharp falls and rallies. Bulls will be hoping that the OPEC cuts in production will swiftly reduce the 'oil lake' that is building across the globe and that winter will not just arrive and disappear but come in to stay for a while. Bears will also be confident of success as little appears to have changed since we slipped to $50.50 last week. This morning has the price for Brent March at 55.23-55.28 which is above the 54.75 volume level but below the 55.95 resistance point. A move above or below these points today could indicate the next direction.

So, after all the fun and headlines, Sterling is back where it was on Monday. The sharp move higher taking us up to 1.9915 at mid day yesterday has been replaced with just as fast a move back down again and we now sit, uncomfortably, at 1.9735-1.9738 having taken out all the weak shorts and have probably now left a few weak longs hanging on at higher levels.

The FTSE made another abortive move lower and as with my comment over the past few days yet again violently rejected the attempt and closed 50 points off the lows. This morning sees mining and oil stocks likely to push us up once more with the early call at 6240-42 but we are getting solid buying in morning activity and we may well do better than this on the off.

Northern Rock beat estimates by £8m coming in at 588m up over 16% for the year on a 23% increase in lending and the shares are expected to open at least 20p up from the close at 1161p.

JD Weatherspoon (admittedly not my favorite type of pub) have shown a 7.5% like for like gain in sales as the push for smoke free trading has paid dividends. This is slightly better than expected and the shares may well recoup some of the losses of the last few days. The shares are also boosted by the technical factor embracing property investment funds (REITS) who are attracted to JD because of the higher than average percentage of freeholds held by the company. The shares are likely to open at around the 671 to 674 level some 10p up from yesterdays close.

Punch Taverns has come in with an 'in line with expectations' trading statement which will have soothed nerves somewhat after the near 10% drop in the shares since the turn of the year.

On the US index front the market continues to surprise with trading days tending to reverse early activity. Yesterday started out looking a tad weak but ended with a straight reversal of Mondays drop and we are once more sitting in the mid 12500's at 12546-25550. The price action neatly touched the upward trend line at 12445 and swiftly rebounded to the close. Today sees little early action with traders concentrating on the currency and UK markets.

FX markets as mentioned earlier and presumably seen by most readers on the news and in the papers this morning had an exciting day yesterday. Cable hitting new 14 year highs (and I am sorry to say that I was around in those heady ERM days) made headlines across the media as manufacturers watch profit margins drain away. Major Bull (and Bear) moves are often ended by price action of this kind as the last doubters are washed away in one last surge. Time will tell whether this was a last gasp move but by the evidence of our clients the final rally up above 1.99 was brutal. Clients having opposed the move all the way up were finally chased out and our book actually went long in the high 1.98's leaving punters nursing some nasty losses.

Support in Sterling is at 1.9730 and 1.9720 but there is some fear that we may retrace down to the 1.95 level and possibly towards the 1.9450 medium term trend support. On the up side 1.9750 has proved to be an important resistance level in times past so if we can regain the level by the close this evening the Bulls will regain some confidence of further rallies.

Finally the Yen has put in a good start to the day pushing below 121 versus the dollar as the 121.80 level proved too tough a nut to crack. With the three day cost of carry to be borne on Yen longs at the close of business today do not be surprised if there is some reversal of today's activity towards the death. But for the moment profit taking appears to be the trade of choice and dealers will be keen to ensure that if the market breaks and holds below 120.65 that they are not caught in a trend reversal move. Current price is at 120.85-120.87.

Gold surged on dollar weakness yesterday but may give some of this up today as the greenback is making something of a fightback versus the Euro and Pound. The close at 646 could not quite break above the closing high back in november at 647.0 but the action did enough to get through the medium term falling trend line in place since July. Should this break be confirmed today the market has alot of blue sky above to play with. That said the early trade is on the soft side with trading down 3.5 at 642.5-643.1.

Oil also managed a good day as cold weather shuffled across europe, we are also close to the start of the latest OPEC induced production cuts which may start to have an impact and George Bush's desire to double the strategic Oil reserve may also help hold up prices. But these moves are become harder and harder to maintain as the flow of oil remains relentless and overall demand is lower than expected. A sharp cold snap may eat in to the huge inventories currently in place but will probably still fail to cut them sufficiently in the short term to make $60 a near term prospect. Brent is off 50 cents this morning at 54.64-54.69 having clawed its way up to 55.15 on the close last night.

IG Group gathers wins in spread betting

Spread betting specialist IG Group increased its half-year pretax profit by 45% on a similar gain in turnover fuelled by expanding abroad, the company said.

IG Group delivered a pretax profit £29.59 million in the six months to 30 November against £20.43 million during the same period in 2005.

Turnover increased by 44% to £55.7 million against £38.6 a year ago. Earnings per share increased by 43% to 6.2p.

Chief executive Tim Howkins said the company has enjoyed eight years of solid growth.

'It's a good set of results but not something that we're not used to,' Howkins said.

New operations in Singapore, Germany and Italy were all contributing to account openings, Howkins said.

Earnings before interest, tax, depreciation and amortisation rose 42% to £30.4 million. The dividend is 2p a share.

Bridgewell rated the shares 'overweight', but that didn't stop investors from dumping them on the market in some profit taking.

IG Group shares were trading down 6.625p at 276.375p, valuing the company at £903.9 million.

The shares rose to 52-week high on 8 January of 303p from a low of 176p in mid-July.

'IG Group's interims suggest the upgrades we made to our full-year numbers in December will prove insufficient to reflect the continued strength of client recruitment across the business,' Bridgewell said.

Spread betting uses the futures market and other contracts for difference to place money on whether stocks, bond, currencies or other instruments will increase in value or fall.

'People don't just want to sit back and let big institutions handle their money, they want to take more interests in their investments,' Howkins said.

He said the company has invested significantly in its IT platforms and launched a new client education program, TradeSense, to increase its rate of recruiting UK clients. The training aims to give clients the knowledge to help them trade more successfully, the company said.

U.K. Regulator Pays Paul Davidson 725,000 Pounds in Legal Costs

The U.K.'s Financial Services Authority paid 725,000 pounds ($1.4 million) to Paul Davidson, the first time the market regulator has been forced to pay legal costs after losing a case.

The FSA paid the money in a "full and final settlement" of its market abuse case against Davidson, FSA spokesman Joseph Eyre said in a telephone interview today. ``The matter is now closed.''

The settlement ends more than three years of legal wrangling. The FSA had sought to fine Davidson a record 750,000 pounds, claiming he illegally manipulated the shares of Cyprotex Plc using a 5 million-pound spread bet. The Financial Services and Markets Tribunal threw the case out on May 16 for lack of evidence. It ordered the regulator to pay costs in October.

"This has been a difficult case for the FSA, and a hard fought one from the beginning," Ian Mason, a former FSA lawyer now working for London law firm Barlow Lyde & Gilbert, said in a telephone interview. "I'm sure lessons will be learned from the case, but will it deter them from bringing difficult cases in future? Probably not," he said.

Davidson, who uses the nickname "the Plumber'" because he used to fit pipes, couldn't be reached on his mobile telephone today. In a telephone interview in October he said the tribunal's decision to award him costs was ``a resounding victory.''

"They picked on the wrong person," he said.

Davidson, who represented himself during the appeal, had estimated his legal costs at 2 million pounds.

Market Abuse

The FSA alleged Davidson abused the market in 2002 by placing a spread bet with the aim of triggering events that would ensure the success of a share offering in a company Davidson owned.

The wager that led to the market abuse allegations was made with spread-betting company City Index on Cyprotex, just before it went public on the Alternative Investment Market in February 2002. Davidson owned 35 percent of Cyprotex, which screens compounds for drug companies.

Because it was such a large bet, City Index hedged itself by buying derivatives from Dresdner Kleinwort Wasserstein. Dresdner in turn hedged itself by subscribing to the Cyprotex offering. This was part of Davidson's plan to prevent the sale from being undersubscribed, the FSA alleged.

Spread betting allows investors to wager on both up and down share movements without the tax and disclosure rules involved in share ownership. A derivative is a financial obligation whose value is derived from interest rates, the outcome of specific events, or the price of underlying assets such as debt. Companies and investors use them to hedge against unexpected price changes.

London Capital sees more than two-fold rise in FY profit, in line with mkt view

LONDON (AFX) - London Capital Group Holdings PLC (operating Capital Spreads) said it expects 'more than a two fold increase' in full-year profits, in line with market expectations.

The spread-betting firm said it had experienced 'strong' organic growth in its main trading divisions during the year, a trend that has continued in early 2007.

The company also said it will pay a maiden dividend for 2006. It intends to issue its 2006 full-year results on Feb 21.

Capital Spreads Market Commentary

One of those days that bookies hate. The favorite coming in in virtually every race.

Clients heavily long of FTSE and short of Dax and Dow left our books technically flat but the strong performance in the UK against a straight sell off in the Dax and Dow left our book runners tearing their hair out!!

Combine this with the rally and subsequent sell off in Gold and Oil (both called correctly by client traders) has left a lot of happy punters around this morning.

This morning sees little reaction to yesterdays market correction in the States with the FTSE just about unchanged this morning at 6225-6227 up 10 still well off the highs of yesterday at 6268 but in better shape than the Dax which at 6695-6697 is 70 off yesterdays opening levels. The Dow is looking sleepy at 12489-12493 up a bit from the close but finding few buyers just at the moment. The FTSE will be looking at the 6245 resistance level which has proved to be something of a barrier but as mentioned yesterday the rapid rejection of any sell off is causing caution in bears minds. Yet again we have had a big move from a weakening move as the FTSE futures took us down to 6195 last night only to have the open this morning take us back up.

The American markets were hit by a downgrading of Boeing by Wachovia on the open of the markets which instigated a fall of over 100 points. There was no follow through however and the US markets spent much of the rest of the day in a tight 30 point range at the new lower level. Investors continue to take all retracements as a new buying opportunity and it will take something dramatic to change this fundamental outlook.

Resolution appears to be being touted as a target for AIG but the share price move would seem to suggest that the big players do not agree. A 10p rally over the past few days (1.7%) does not exactly resonate with speculative buying. Capital Spreads quotes them at 660.2-662.8.

In the FX markets Cable is grinding higher probably because too many people are short (expecting a pull back). At 1.9823-1.9826 we are just short of the 1.9850 highs recorded on the 1st December last year. As we grind higher more shorts are squeezed out and we go higher again sucking in sellers who are trying to pick a top only to be squeezed themselves. The $2 level will exert an undeniable attraction to traders (especially as there will be a large number of option writers at that level who will be looking to delta hedge their exposure).

The Dollar has been the faller this morning dropping against both the Pound and the Euro and even (wonder of wonders) the Yen has managed to push away from its lows. At 121.40-121.42 the Yen is still very much out of favour but the dollar is really struggling to break through the massive resistance at 121.80 to 121.90 (mentioned ad-nauseam in previous comments). Our clients are taking the opportunity of selling at any approach to this level with heavy selling in the 121.70's last night and early this morning. At 121.40 currently they are now sitting on a nice buffer.

Gold threatened to break higher yesterday but as in previous attempts at the 640 area the effort proved too much and sellers drifted in at the 639 level to send us back to virtually unchanged on the close at $634. With the dollar weakness this morning buyers are in evidence once more and we have moved to 636.5-637.1 but if this is the limit of the move with the greenback almost at its low versus the pound then we may be waiting a while for a new break to the highs.

As feared Oil failed to make headway even on the poor weather news and whilst the fall was not extreme (falling from 54.60 to 52.15) it confirmed the feeling that these levels may be here to stay. This morning we have moved slightly higher to 52.90-52.95 up 20c on the close but dealers are wary of getting too carried away.

Past Spread Betting News