Financial Spread Betting News

Early calls on the FTSE are for a drop of around 20 points to 6533-6537 as the UK index tries to shrug off the fast falling Dax. Volatility appears to be getting quite fierce in the european indices with the FTSE performing four reversals in row (called one way at the open and then closing the other). Analysts will be checking their tea leaves to see whether this may be an indication of a possible short term turning point. We are coming in for heavy morning selling in both the FTSE and Dax with early calls at 6535-6536 and 7426-7428 respectively.

Clients had one of those sparklling days where nearly everything seemed to go well with initial longs in most indices being swiftly replaced with shorts then longs then shorts. For an overall happy trading day.

The Dow, having looked at various points to be going up then down managed eventually to close just on the side of the angels but this morning the effort appears to have been too much as the overnight falls in the Nikkei and the opening calls in the European markets weigh on early sentiment. The call is for the Wall Street quote to be some 30 off at 13316-13320. Good Support is at 13315 then 13290 and 13200. Solid resistance at the highs of 13370 (only 50 points away).

On the FX front cable remains around the 1.98 level (as we were yesterday) in fact nearly everything is much the same with just the Euro looking to be moving higher. Sterling is stuck in a tight range between 1.9760 and 1.9845 but with a whole swathe of US numbers ot this afternoon we can expect traders to break out of this region in afternoon activity.

GBP/JPY is holding above 238.00 this morning having looked at the 237.75 support overnight but we are seeing some selling as punters take quick profits and start to set up some shorts. Clients seem to be positive on gbp/usd but negative on the yen cross. Effectively looking for a usd/yen fall from above 120.00. The dollar made yet another attempt to move above 120.50 overnight but, as in previous four attempts, the effort was too much and sellers came in to push us down to the current 120.16-120.18. Clients are going for a pull back in this cross possibly to the trend line support at around 119.00.

Gold drifted yesterday after failing to build on the move up to $674 and we eventually closed down slightly at 667. We are seeing a bit of buying interest (yet again) at these levels and the market obviously agrees at the moment with a small shift higher to 669.0-669.6 currently.

Negotiations around the possible acquisition of international derivatives provider Global Trader by a UK private equity group have come to a close without a transaction taking place.

The two parties were unable to reach a satisfactory outcome around the tentative offer made in November last year and have decided to withdraw from the negotiations on amicable terms.

With institutional and private clients in over 29 countries, Global Trader provided an attractive opportunity for a private equity fund to benefit from a rapidly expanding company operating in high growth markets.

Global Trader is an international provider of tailored leveraged brokerage execution services, predominantly through the use of Contracts For Difference (CFDs) which the company has pioneered in emerging markets since 2000.

One market in which Global Trader has enjoyed considerable success is South Africa, with the Johannesburg-based office carving its own niche in local derivatives trading for retail and institutional investors alike.

Charles Savage, Managing Director of Global Trader South Africa, says the company will continue to build on the exceptional trading levels seen over the past year as the derivatives specialist continues with "business as usual".

"The growth over the last year has been ahead of budget, with a substantial increase in top line trading income in the 12 months to March 2007 driving a commensurate increase in pre tax profits for the group," says Andrew Proctor, the group’s CFO. This growth has accelerated in recent months, spurred on by the recent run on equity markets worldwide.

Equities, indices, commodities and individual stocks in which Global Trader offers its CFD products are breaching all-time highs on a weekly basis. The market for leveraged derivatives products is growing in size and maturity on a daily basis, not only in South Africa, but also in other developing economies such as Thailand, India and most of Eastern Europe.

"The termination of the transaction has given Global Trader a clear focus on continuing the growth of the business whilst strengthening its infrastructure and capacity. The Board and Executive look forward to Global Trader’s continued growth and its successful move into the next phase of its life cycle," Fleur Gremmen, Global Trader group CEO said.

I’ve received the following e-mail from CMC

BAD NEWS, FROM 7TH MAY THEY ARE GOING TO WIDEN THE SPREADS

Examples

The credit will be calculated by using the Mark to Market price as at the close of business 4th May 2007. CMC Markets will not recover any difference from your account if you are subsequently debited less than the original rebate.

We are committed to offering you the best trading service and you will find that our spreads remain the most competitive in the market, however should you have any questions about your new spreads, please contact the Helpdesk by emailing helpdesk@cmcmarkets.co.uk, or by telephoning +44 (0)20 7170 8205.

Thompson have come in with a shares and cash bid for Reuters at around the £7 mark bidding 40% above the close price before the bid was announced. The shares have been doing well recently any way so holders are sitting very happily on their positions. Our clients are substantially long and will be looking at taking some well earned profits this morning. This is in line with some recent announcements which have come in at almost knockout prices from the off to try to avoid any bidding war developing.

The ABN Amro board were almost forced into rejecting the RBS bid for LaSalle as otherwise they may be personally liable to BOA. How, with a straight face, the board can possibly say that the bid from the consortium (which is a cash bid) is not good value for share holders will be one of the mysteries of the year. If ABN have really given a free poisoned pill to BOA of approaching $10bln the board will probably be sued by existing shareholders so they are now damned whichever way they move. The feeling in the city is that in their maneuvering to featherbed their own personal positions in the new Barclays/ABN board to the disadvantage of existing shareholders that they have made a series of, at best, dubious decisions. RBS may feel that they can still go ahead but will need some solid legal footwork otherwise the whole deal will fall apart.

There were so many FTSE 100 bids last week that some may be wondering why the index did not do better the rally of some 160 points was only slightly better than the Dax, S&P and Dow. We may be looking at some serious profit taking this morning as our punters start to lock in profits; clients have been selling the FTSE index heavily in early pre-market business.

The Dow crept up a little further yesterday as the benign interest rate outlook gave investors support at current levels and the S&P's apparent ability to hold on quite comfortably to the 1500 level will give hopes for more.

On the FX front cable bounced off the 1.9860 level again on Friday (although we gave it a good solid attack) but the trend at the moment is to the down side after the peaks reached in mid April. The current price of 1.9940-1.9943 is up 15 pips overnight as the dollar weakens slightly. Clients have been selling the dollar over the past few trading sessions after the recent rallies in the greenback and the y will be happy to see the eur/usd back above 1.36 after slipping down to 1.3530 on Friday morning. Without the UK (the worlds biggest FX market) yesterday the markets did vey little and punters will be returning this morning to a very much unchanged price arena.

The yen has amanged to push below 120 vs the dollar but there is solid support in the 119.70-119.85 region that must be broken before further movement can be hoped for. With the price now at 119.90-119.92 our clients are still short the dollar but the cost of holding overnight is slightly daunting. The Yen has been on a slippery slope downwards versus all the major crosses with all time lows against the euro on almost a daily basis. In a global economy where businesses can dictate their currency of choice the attraction of the yen as a 'borrowing' base against the attraction of almost every other currency as a 'purchasing' base is unlikely to disappear soon.

Clients have been more than pleased by the move in Gold. As mentioned ad-nauseam punters have been buying Gold on every pull back and the bounce from the 670 region late last week has paid dividends. Gold is slightly down at 687.8-688.4 but there is still precious little selling from our punters.

Conversely Oil hit our oil traders once more as they attempted to buy into the falls of recent days. Yesterday saw falls to as low at 63.70 in June Brent causing many to cut longs. This morning we are back up at 64.70-67.75 some 30 higher than yesterday's close but the market seems to have got its selling boots on. As mentioned last week a fall below 65.80 was a trigger for stops and reversals and this appears to have been the case.

Growing numbers of punters are taking bets on the housing market without even buying a property.

Spread betting group Cantor Spreadfair has seen a doubling in the number of gamblers betting on a rise or fall in property prices in the past two months.

Rob Thomas of the Council of Mortgage Lenders claimed the growth was a result of increasing uncertainty about house prices. "Two views make a market and there are concerns that house prices may be heading for a fall in 2008," he said.

Fears have been stoked by recent research from Lombard Street showed that unaffordability is at its worst level since the end of 1992. In addition, Halifax data last week showed that the rate of monthly house price inflation has slowed from 1.9pc in February to 1pc last month.

Unlike normal property investment, spread betting allows people to make money when the market slumps. Simon Smith, the market maker for Cantor Spreadfair, said some people are "going short" to hedge themselves against a drop in the value of their own property.

Markets have opened higher once more with the FTSE pressuring the 6550 level and the S&P attempting to consolidate above 1500.

The Dax appears to be running out of steam having opened higher on the off to record a new high at 7484 but the effort to get above this level seems to be too great for the moment and we have drifted down to 7460-7462.

The Dow also continues to look strong but hit exactly the same high yesterday at 13253 as on Wednesday. The market appears to be contracting just below this level and this may indicate either a sharp move higher or lower. The price at the moment is 13245-13249 favouring the upside slightly but clients are selling heavily into this latest move up.

HMV have slipped again this morning hitting 108p in early action before bouncing slightly. Sales continue to weaken and it seems that there may have been a big investor offloading.

BLT have had a buy recommendation slapped on them from Merrill’s who reckon that there is a good chance of a privat e equity interest in the company.

On the FX front sterling is sitting on support at 1.9860 (ish) and clients are trying to pick a bottom. Buyers outweigh sellers by a considerable margin and they are hoping for a bounce from here. Unfortunately the momentum appears to be to the downside for the moment but this level has held a few times so punters are going for a repeat.

The Yen has managed to stop the rot for a day at least. With the levels of yesterday morning remaining pretty much in place today. Sterling’s weakness against the dollar was reflected in some pull back against the Yen as well and we are now sitting just on 239 having failed to break above 239.50 yesterday. Above 239.50 there is the 240 resistance and then the high of 24150 hit in January. The rate of Yen weakness is slowing at the moment so it may take some serious information for the pound to break higher again but of course we have the potential rate hike next week which may well be the catalyst required.

Gold pleased our punters by bouncing from the 670 level to record a move back above 680. As mentioned clients have been taking every sell of as a buying opportunity and are now very long indeed. The trend is still very much positive with the support line quite a way below at around 660 and 650. This morning sees us a tad lower at 680.2-680.8 but clients still appear very confident.

Oil as mentioned yesterday remains quite boring and closed just 20 cents down having traded in a 150 cent range. We need a close below 65.70 or above 68.50 to whet the momentum traders appetites. Currently at 66.47-66.52 up 40 on the day and business is light.

Lots of reporting today as companies release quarterly/semi annual updates and a fair few AGMs as well.

The FTSE is called almost unchanged this morning at 6483-6484 after the American markets drifted from highs in the evening session at just over 13250 in the Dow to close (still at a record) at around the 13200 level. This morning sees some further buying in the Dow futures with punters still trying to call a top and selling on every surge higher. The FTSE is seeing buying from clients, in pre market activity, looking for a upsurge from the corporate numbers out this morning.

The S&P also printed a new high before a late sell off and the index seems to be making heavy weather of closing above 1496 or so. Dealers are looking for that elusive 1500 print. We have now had four closing levels between 1493 and 1496 in the last six days and as the sell off on Monday showed continued failure to make progress runs the risk of sharp pull backs.

Shell have announced solid numbers for the 1st quarter showing 5.7 percent increase in profits at $7.3 significantly higher than analysts estimates. The shares are almost certain to have a small surge on the open in response. With the Nigerian production due to come back on line and with hopes for a more stable regime in place Shell may well surprise to the upside again later in the year. Unfortunately the fractious nature of the areas of the world in which the company does business is always open to surprises.

Tompkins has come in with some grim numbers with both sales and profits of on last year. The board has not given an inspiring view of business conditions either and the stock is likely to be hit on the open. Reports at the end of April that the company is in the firing line for a bid will prop up the price to some extent but unless something solid appears soon our clients will be quick to reduce exposure.

HMV continues to lurch into the sidings with the latest trading statement showing like for like sales down 3.5%. The cost savings programme is going well but with a falling revenue stream making savings to produce profit targets is akin the rearranging the deck chairs on the Titanic.

Currency markets showed that the dollar is not done yet with the greenback managing to bounce back from the lows of last week. Cable initially looked to be on the up but stronger than expected US data brought the dollar bulls back in and Sterling slipped not just through $2 but down below 1.99 as well. The support below 1.9875 held firm though and we are now just above the 1.99 level at 1.9914-1.9917. Sterling charts are showing a slow drift lower over the past two weeks as we continually make lower highs on each push up whilst recording lower lows on the moves down. The chart structure is beginning to resemble the moves in December and February where the markets drifted before making big falls only to recover and go higher.

The Euro whilst lower against the dollar yesterday remains the currency of strength as investors continue to accumulate. A new record high against the Yen this morning at 163.51-163.54 will not help the ECB in its arguments for higher rates and vs the pound we are sitting just above the massive 1.4570 to 1.4610 support range at 1.4629-1.4933. If the level is tested and broken we may fall to 1.4350 in short order.

The Yen is still the global 'sick man' as the cost of carry refuses to go away. The dollar is back above 120.10-120.12 which not many would have forecast a few short months ago. There is now a good chance that the slow steady grind higher will start to impact longer term shorts and the speculation is growing that we could perhaps make a sharp move towards the highs of Feb and Jan at 122.00.

Gold reacted to the strength in the dollar by slipping slightly giving bullish clients the opportunity to continue to buy at lower levels. The bull trend remains in place so long as the rising support at 648 is not broken although there is a smaller trend at 660 which may prove important if approached. The current price is 673.2-673.8 up about half a dollar.

Oil seems to be losing some of its appeal for traders as we have spent the last month in a 3 dollar range (65.50 to 68.80 approx). We are sitting near the lows of this at 66.44-66.49 in the June Brent but there seems little indication of a further attack on the downside.

BetOnMarkets Reports Record 2006 Results

BetOnMarkets, the world’s foremost fixed odds financial betting provider operating eight websites in seven countries, has announced impressive financial results for the year ending 31 December 2006.

The company’s turnover saw a 34 percent increase hitting a record $100 million while gross profit shot up by 290 percent to a total of $5.3 million.

Commenting on the results, Jean-Yves Sireau, CEO of BetOnMarkets said: ‘These are excellent results, which clearly demonstrate BetOnMarkets’ superior customer offering and international appeal. We have accepted over 10 million transactions since the group was established in 2000 and we look forward to continued growth in 2007.’

BetOnMarkets fixed odds betting system, which limits customers risk to their fixed stake, has seen continued expansion with the group’s two largest websites betonmarkets.co.uk and betonmarkets.com taking between 6,000-10,000 bets per day, worth approximately £5 million per month.

Worldspreads hopes for British profit

The Irish Examiner says Irish spreadbetting operation Worldspreads is expecting its British division to make a profit this year after losing €1.6m in 2006.

The paper quotes accounts just filed for Worldspreads, which owns the Sport Spreads and Supreme Odds betting sites, as showing that the group lost €1m in the year to end March 2006.

The group loss for the year is down from €1.6m in the 2005 financial year, which is solely down to starting up its British operations, which will make a profit in the 12 months to the end of March.

The company said its Irish spreadbetting division showed exceptional growth and made a profit before tax of €536,082.

Little news overnight will mean that the FTSE (which gave up all of the opening gains yesterday by the close) opens unchanged at around 6467-6468. Clients are sitting on shorts and are breathing a little easier after holding on through the move above 6500 yesterday.

Markets are beginning to look a bit tired after the flurry of the last few weeks and with the old 'sell in May' now being punted around by various commentators we can expect some position liquidation in the next few trading days.

The FTSE is still just about the worst performing of the major indices as it suffers worst on bad days and underperforms on good. Reporting from various corporates has been mixed to good so far and so punters will probably be tempted in on the buy side of individual stocks rather than the index as a whole.

Colt has turned into profit for the first qtr after increasing sales of services. Total revenue was actually down so the shares will probably react pretty negatively on the off this morning. The close at around 170p last night is looking a tad on the pricey side and we may open as much as 10p off.

Aside from Colt there is little to go on with even the M&A gravy train subsiding for a few days as we watch the Barclays/RBS/ABN soap opera unfold.

On the FX front Cable has slipped again pushing down solidly below $2 and is now at 1.9870-1.9873. Traders will be eyeing the 1.9850 and 1.9815 support levels. Any attempt at these could indicate a move back into the 1.92 -1.98 trading range. With the BOE almost certain to raise rates traders may be tempted to go for return but the overall picture of the UK economy is not so wonderful and is very vulnerable to a credit squeeze.

The 238.50 level in gbp/jpy again proved too much for traders to overcome and even though the yen is down heavily today sterling has been unable to make up for its own problems. We are now back at 237.62-237.70 and clients have had a good time of setting up shorts above 238.00.

Amidst all of this the Euro continues (overall) to strengthen. The eur/yen is still above 162.00 although slightly off overnight having hit an all time high yesterday and in the early hours this morning. We have now set up a new top resistance at 162.80 and punters will be looking to short again if we approach this target. The weakness in the Yen is vs Euro land is now looking a bit too extended having now moved some 15% in the last year.

For all of the talk of usd/yen 'cost of carry', 'value', 'deficits' etc the cross rate is almost unchanged on the end of the year and in fact since the end of 2005.

Gold ran into some profit taking as dealers worried about the dollar recovery. The bullish trend (as mentioned before) remains in place so long as we stay over 655 but that is quite some way away and many longs may be unable to hold on if the market dips to attempt the down side. Current price is 672.3-672.9 down $13 from yesterdays opening levels. Clients remain on the long side.

FTSE is sneaking a look over 6500 on the open this morning after the US markets went walkabout last night.

A stream of good corporate results puts the average increase in profits at just north of 15% for S&P 500 stocks, far in excess of analysts expectations. Extrapolating these numbers forward means that the markets could well be in for more to the upside especially if investors start to believe they are missing the gravy train.

The early call on the FTSE is for 6502-6506 and our clients (who as I mentioned yesterday were trying to sell the indices) are suffering on the rise. Whilst clients are not as short as they have been in the past there is still some serious pain being taken.

The Dax is opening 50 higher at 7391-7393 and even the Dow which had a good move yesterday is up slightly on the Apple numbers at 13095-13099.

Cable continues to look strong in the absence of any other major cross activity with gbp/jpy pushing above 238.00. The 238.50 level has proved difficult in the past to bust through and we may see some selling as we approach the level.

Overnight the eur/yen cross hit almost the same all time high of 162.40 as two weeks ago and longs are as in the gbp cross looking to take profits at these levels and sit back to see whether the move can continue to the upside. In conversation with FX dealers they seem happy to let someone else force through to new highs. Current price is 162.16-162.19 having got up to 162.32-162.35 in early activity.

Gold is sitting comfortably in the mid 680's and appears to be consolidating as it has done in the past. The longer we remain at the higher levels with no pull back the greater the probability of a break out to the upside. The current price is 685.0-685.6 up a buck or two on last nights rather drab close.

Unlike the indices the oil market is being much more trader friendly having dropped a couple of bucks allowing all the shorts to take profits and go long we proceeded to retrace the move higher once more giving punters a nice little 'double-whammy'.

Problems on our platform this morning so short comment.

Early call was for markets to slip lower which was disappointing as the call late last night was on the up side. But early buying seems to be the order of the day.

All of the glowing reports that finally UK plc is on the acquisition hunt in Europe and the States is rather rattling punters who feel that the prices being paid are hardly earnings enhancing in the short to medium term.

Clients have put their faith in a bit of a pull back in the US markets going heavily short of the Dow and S&P but the problem remains that we need a sell trigger to really get negative. Numbers coming out from the various corporate releases are reasonably supportive of current valuations and with Mervyn King warning that the future for the UK economy is not so bright there is the (remote) chance that the BOE may not be as aggressive on the rate front as many fear.

Barclays are unlikely to beat the renewed RBS offer for ABN as the €36 odd offered was deemed to be the top end of what they could pay. RBS, Santander and Fortis making a joint €39 bid for the company may win the day but in the short term RBS shareholders are unlikely to be best pleased. The stock is not likely to be up on the news.

Game Group have come in with a stoking increase in net revenue from 2.7m to 21.1m. Shares are likely to do well this morning as same store sales continue to rise strongly.

Reuters (whose revenue is mainly in dollars) are suffering in the wake of the greenbacks demise but have reiterated their revenue target for 2007. Hopefully the Finance director has covered the dollar risk for the next few years. Revenue growth of 6.5% is not bad but not stellar either. Shares are likely to open on unchanged on the news.

Cable is drifting higher in early trade as punters continue to focus on returns. Weak longs were forced out yesterday as the price pushed down to 1.9950 but repeated attempts throughout the day to go lower were defeated resulting in a late rally above $2 again. Today we are some 30 pips up at 2.0047-2.0050 and clients are very much two-way with buyers and sellers matching each other in early activity. Yesterday’s failure to go down has put a support at the 1.9950 level but 2.0060 is also proving difficult to overcome.

Eur/Usd is looking strong as well with punters probing the 1.3650 level for signs of weakness. The all time high back in 2004 at 1.3675 is well in sight and we can consider a solid attack likely at some time. The various components of the Euroland group are getting a bit twitchy at these levels and we can expect some further strong comments from the French, Spanish and Italians on ECB policy. From the point of view of the Southern European countries interest rate policy is being set with Northern growth in mind.

Gold, as feared, slipped on the failure to secure a foothold above $691 but the bull trend is still very much in place. Only a serious fall below $655 would worry the long term buyers. Clients continue to buy on dips and at 685.2-685.8 the market is slightly higher this morning.

Oil fell dramatically yesterday doing our clients (finally) a nice little favour. Punters have been trying to call the top for a while and yesterdays move was very welcome. Today sees Brent slightly higher at 67.31-67.36 in light trade and with the Oil inventories this afternoon from the States we can expect little action until then.

Quiet opening as players look to the recent M&A and takeover activity. Punters are getting a little nervous at these levels especially as the prices being paid by the acquisitive seemed to have reached stellar levels.

The US markets seemed to be reacting to the oil rally and were soft throughout the session but buying over in the far east is likely to get traders on the front foot at the opens this morning. Punters continue to short the FTSE, Dow, Dax (in fact just about everything except the NIkkei). The 13000 level in the Dow is exerting a fascination with punters as is 1850 with the Nasdaq, 6500 for the FTSE and, a bit further away 7500 in the Dax and 1500 in the S&P. With such heavy psychological barriers sitting just above current levels we will either sit in a tight trading range for some time or smash through in one spectacular surge.

India failed to raise rates this morning which was something of a surprise I understand which will probably mean a new boost to the Sensex and ancillary markets.

BP announcing a drop in earnings in 1st quarter has not exactly surprised but when you add the woes of recent years meaning any board decision will have to factor in the unquantifiable 'social aspect' does not exactly fall in line with investor growth requirements.

Astra Zeneca may be on the hunt for new product but if our clients comments on the sum paid for Medimune are anything to go by the AGM could be interesting. A 50% premium on the price just 10 days ago and fully 65 times 2007 earnings looks an almost unbelievable price to pay even if the company is desperate for new product. The feeling going around is more that they could have bid substantially less and still won. Stacking up the debt (presumably at the same time damaging your rating) means that AZN will probably be borrowing at over 6% all in. When you have bought the asset at 65 times forward expectations it does not take a rocket scientist to tell you that this is definitely dilutive to earnings for the next few years at least.

On the FX front punters are taking the current trading pattern as an opportunity to trade the ranges. One client traded the 1.9985 to 2.0010 range four times yesterday. This morning sees the cross slightly lower at 1.9975-1.9978 and traders are quite flat for the moment. The feeling is beginning to rise that too many people are sitting on dollar short positions and that we may need a bit of a shake out of weak dollar sellers before pushing up again.

Aside from long term position holders the last few weeks seems to have shaken out many of day traders who have been damaged by unexpected extensions or reversals of moves. The CS book has never had so many open bets whilst at the same time having such small outright exposure (as an example we have over 400 separate gbp/usd positions ranging from £1 to £300 and the net effect is just £20 a point long).

Yet again the yen took one look at my comments yesterday and immediately reversed direction. Today we are almost back at the same levels as yesterday morning having put on a good performance overnight once more. Europe and the US seem to have got into a habit of betting against yen strength on Far East buying. If the buying is coming from those on the spot we may find that there is more to know. usd/yen is at 118.46-118.48 having been as low as 118.20 in the small hours. gbp/yen is back at the mid 236 level having briefly slipped below the bullish trend line in place since late Feb. A close below 236.40 may indicate a bit of near term profit taking.

Gold slipped quietly back below 691 yesterday and this morning is following on in very light activity. At 688.5-689.1 we are $2 lower this morning but clients remain solidly bullish.

Oil was squeezed again with Brent once more rallying further than the US. Punters are once again suffering as they attempt to call a high. At 68.45-68.50 in June Brent we are another 35 pips up on yesterdays move and as with the dollar traders the market could well be looking for weak shorts.

Well Barclays have shown their hand and come in with what they obviously hope is a knockout blow at €36.25. Given that the original expectation was 'no higher' than €35 investors in Barclays stock may have a bit of a downer on the off. In reality the value of ABN is not just in its current income but also in the synergy savings that can be made. The Bank has continually failed to turn good top end revenue into bottom line profit and a clean out of the surplus middle management tiers will almost certainly make this a top line acquisition. Plus the fact is that it is rather nice to see a UK bank taking over a European for a change.

The FTSE is called some 10 points up on the open at 6496-6497 and our clients continue to run with the move having topped up again on the short sharp fall after the close on Friday. The 6500 level may cause some fears as we failed at this level last week but the momentum is definitely with the buyers at the moment. If we pause for too long in the high 6490's then sellers are likely to be tempted into the game.

Over the next few weeks we have the majority of the FTSE 100 hosting AGM's and giving quarterly trading updates. Punters will be hoping for further improvements in corporate outlook but do not be surprised if a few companies make comments along the lines of 'difficult trading environment' as consumers may been feeling the pinch a bit at the moment.

The Dow put on a great performance by the close on Friday to draw just shy of 13000 and is opening just a little up at 12975-12979. To complete the triumvirate the S&P is also toying with the 1500 level although in this case we are a bit away at 1485.2-1485.6 (these days just a couple of trading days!!).

With the equity markets going great guns the currency arena seems to have stopped for a bit of a breather. Cable having broken through $2 is making heavy weather of any further progress and we probably need some further news to push us higher. The weekend press was full of reasons why rates may not actually go much higher no matter the current headline inflation rate as, by the end of the year even with the bank doing nothing; inflation should have fallen well below 2%. In that scenario there is always the chance that the BOE may not move at all (not a big chance admittedly but there all the same). Commentators bleating about house price inflation tend to miss the point. Houses are assets rather like shares... you do not get much call for a rate hike because the FTSE 100 has rallied 30% in the last two years. it is not the BOE's job to keep house prices under control.

Anyway, with Cable at 2.0015-2.0018 we are seeing rather more sellers than of late as the rise of the pound seems to be finding fewer friends just for the time being. Another weak data number from the States (or Japan) and the pound may well be on the move once more but, as mentioned, for the time being the bulls seem to be taking profits and sitting on their hands.

The Yen is holding steady as well this morning as (just for once) we have managed to open a week without a week end sell off. Versus the dollar we are settling into a 117.50 to 119.50 range and against the pound the 138.50 level appears to be holding firm after several attacks. The crosses are falling in morning trade with the eur/yen which hit 161.80 in the early hours now slipping down at 160.77-160.80. Speculation that the highs of 162.40 hit last week may take some beating is growing with our clients who seem keener to oppose the carry trade for the first time in a while.

Gold managed to break the 691 resistance level but found no follow through at all is falling slowly in morning activity and is now flirting with breaking back down into the 679-691 range at 690.4-691.0. Clients are still confident and are buying in slow activity.

June Brent which had narrowed to 150 cents over Nymex appears to be widening once more. The spread is nor 260 cents and whilst the extremes of the May contract (which reached over 500 cents) are not expected punters are looking to avoid potential squeezes in the IPE Brent contract and are concentrating their trades in the Nymex. At 63.80-63.86 the June Nymex is just softening slightly in morning activity with support just below at 63.55 and 63.30 and strong resistance above at 64.40.

American and Far East markets will pull Europe higher in what is expected to be a slow day. No corporate news and the only ripple on the horizon is the UK retail sales out at 9.30 are expected to be a reasonable +4.7% YOY or +0.5% MOM.

The FTSE is due to open in line with last nights 21.00 closing estimates at 6464-6465 with punters seemingly in the groove at the moment on the UK index. Clients were heavily short on the recent two day drop and turned round to go long for the bounce yesterday afternoon. "its enough to make a bookie weep".

Overnight news that premium fixed rate mortgages are being pulled by the banks is likely to harm house builders and the fall in Mortgage Applications in the states (a far greater than expected minus 2.5%) will worry investors in any Property based markets. Whilst the announcement of agreement between Boots and Primera at 1090p will give our punters in the stock an extra little bunce. As with all the 'confirmed interest' bids the final number has exceeded the initial interest. The only failures in recent months have been of the 'rumour' or 'not firm' approaches all of the real M&A action has rewarded punters who have gone for the long ride.

The FX markets were looking quiet until a few minutes ago with all crosses flat overnight but a rumour of stronger than expected retail sales is creeping across the screens and sterling has pushed up to 2.0065-2.0068 in a few minutes.

No sooner had I written, yesterday, that the Yen may finally find some buyers after showing a strong move in early trade on the back of strong Chinese growth than it turned straight back round and slumped down, moving from 235.20 on its lows vs gbp to the current 238.08-238.16. At least it had the decency to bounce from my support level vs the dollar at 117.60 before doing so. Clients, for once, made use of this and were buyers on the lows of the day yesterday and made a nice little turn selling later on at around 118.40 the old support/resistance level. Today is a little less clear with not really much to go for. At 118.66-118.68 the bulls appear to have the running and there is not much in the way of a move higher to the 119.50 level but in reality the market does not feel that powerful either and bears may be tempted to see whether the aforementioned 118.40 has more attraction.

Clients who read these comments will be pleased to see the pull back from 691 in Gold which has made the profit taking mentioned in the past few days the move to make. The fall back down to 680 yesterday gave the long term bulls the chance to buy in once more. Punters have been waiting for a fall to get into the market and the weakness gave them just the chance they needed.

Oil tried to move higher yesterday but the effort proved too much and we drifted to the 65.70 (June brent) level four times during the trading session bouncing less each time. Punters will be eying this level as a move below here could bring out the sellers once more. The market bounced off here in early activity this morning as well so punters will be cautious and putting any sell stops around this level..

And so we contemplate a world with sterling above $2. Currency traders continue to buy the high yielding currencies and the biggest of the lot is the pound. At 5.25% (expected to be at least 5.75% and possibly 6% by the autumn) returns on sterling are outstripping rivals and although many people can point to much that is wrong with the UK economy the same (or at least similarly scary) arguments can be used for many of the other major currencies.

The FTSE is down about 20 points this morning as traders take stock of the new highs reached over the last few weeks. Revenue earned abroad (mainly dollars) and translated into Sterling is slowly being devalued by the rise of the pound so there is a small hunt for companies likely to be affected. Trading at 6479-6480, as mentioned off 20, the index looks comfortable here for the time being. Company results continue to justify the premium values with (to date) the few reporting so far in the States verging on the better than expected side.

The Dax has finally taken a pause coming off some 50 points from the highs of yesterday as investors take a few profits. The index has outperformed the FTSE by double so far this year rallying ove 11% against the FTSE more sedate (but still nice) 5%. Punters who have been trying to short the Dax for some time are coming in again this morning selling down to the current 7310-7312.

EMI has confirmed what most already knew that the Music arm revenues have fallen significantly but they have bitten the bullet and have suspended dividend payments. The market seems to like the action being taken by the board and the shares are 5p higher this morning at around 220p.

On the FX front after yesterdays fireworks dealers are pausing for breath and most crosses are virtually unchanged overnight. Cable at 1.2090-1.2092 is up slightly but the move appears to have little follow through and we may see some sellers drift into the markets. Punters remain short of sterling (as they, unfortunately, have been for the last week) and seem comfortable on the open. For once they may get a little relief in early activity.

On the Gold front we are at the top of the trading range at 689.5-690.1, a break above 691 may give the opportunity for a move towards $700. Clients seem less enthusiastic than of late with (shock horror) a few seller creeping out of the woodwork. There appears to a feeling of "well we think it is going to get to $700 but someone else can get it there!"

Oil is moving a little higher this morning as the spread between Brent and Nymex finally contracts. Last week the June spread was at over $3, it is now down at $1.50 and drifting as I write. Historically Brent has traded at below Nymex so the current state of affaires is still unusual. Brent is up 27 cents at 66.20-66.25.

European Markets went ballistic yesterday with the Dax pushing over 100 points higher in basically one way action. The FTSE did its best to keep pace but ended just (!) 55 higher again in one way activity.

This morning there is a little bit of a pull back as the Nikkei went into a rather surprising reverse closing 100 off at 17527. The early call on the European markets is for just 20 to 30 points off on most of them. Early activity from clients has been muted as most are still suffering from trying to sell into the rally over the past few days but there is tentative buying on the Dax drop as punters look for further price action in what is the best performing mature market in Europe and the US.

Two diverse trading statements from the high street as Tesco and Debenhams release data. Tesco makes a record profit (yawn) but manages to surprise on the up side (no mean feat) the shares are being traded some 12p higher at around 466p a new all time high. At the same time Debenhams has given substance to the fears circulating the market in recent weeks by warning on profits. Frankly investors can not say they were not warned over this stock. Most analysts felt that it was absurdly over priced on launch and the only surprise here is that they managed to get the deal away. On a personal level going into the Flagship Oxford street store is like entering a time warp with 70's and 80's style shop floor displays, poor lifts, old escalators, dingy stair wells and an overall sense of lack of investment. The shares are now at their low since the float at around 152p, only very optimistic investors will get involved even here.

The dollar is weakening still further this morning with traders looking for the $2 print. Whilst the strength in the pound probably relates more to weakness in the dollar and yen than to anything particularly wonderful about the UK the strength is still something of a boon for BOE inflation fears and at the same time an albatross over the neck of the exporting sector of the country. As an aside it might also be pointed out that much of investment banks money is made in dollars. In sterling terms the big four's treasury units may find that there is a small gap in expectation over fact.

Cable is at 1.9913-1.9916 and buyers are being tempted into the frame. PPI inflation was higher than expected and house price continue to make headlines so the BOE is almost certain to turn the screw one more time at least. We will be looking at resistance at 1.9928 and 1.9940 before thoughts will turn to the 2 buck level. On the support side we have strong support at 1.9880 and 1.9855 before the lower level at 1.9792.

The yen is putting in a rare burst of power today managing to reverse some of the recent falls. At 237.59-237.67 vs sterling we have rejected the 238.50 level but clients are still very long (from much lower levels) and are happy to hold on a wait to see if a move to the 240/241 highs develops. Only a break and close below 236.50 would give reason to get out of longs whilst a move below 235.50 might indicate a move into short positions.

Gold is at exactly the same level as yesterday morning and it is beginning to feel as though we have moved onto another step level the previous one being 672-679 and this one being 683-690. We may be stuck here for awhile if nothing dramatic develops in the markets but the trend is still bullish and clients continue to hold longs. Price is currently 687.3-687.9 and dealing is very quiet this morning.

Finally the battered bears in oil had something to smile about with June Brent slipping 130 pips yesterday coming as some relief. Punters swiftly took what profits they could and we now have quite a flat book with bulls and bears almost balancing out. This morning sees the price up 50 pips at 67.65-67.70 but again there is little action in early trade.

Far Eastern markets took turns in hitting all time or near all time highs last night and this will push all the Euro markets higher this morning. The old 'Goldilocks' scenario seems to be rearing its head with the markets "not too hot and not too cold". Equity investors love stable environments where companies are just left to get on with making profits without too much outside interference.

The FTSE is called up 25 at 6486-6487 the highest level since 2000 as we close in (oh so slowly) on the previous all time high. The Dax has no such inhibitions moving ever higher as the tech heavy index outpaces virtually every other mature market. Now 750 over the rather more sedate UK top 100 our clients are finally losing interest in trying to play the FTSE/Dax difference having been short for almost all of the post 300 point move (ouch).

Weekend speculation on a move by Gazprom into the domestic Gas supply markets in the UK are likely to put a bit of a dampener on BG this morning.

The battle for ABN is heating up with the under pressure Dutch operation revealing that figures for the first three months of the year will be better than expected (quelle surprise!, with the increased volatility in markets, increased M&A activity and the continued strong growth in the Far East virtually every investment bank is probably printing money at the moment). RBS and Barclays appear to be the main suitors (with HSBC in the wings) but a main European bidder cannot be ruled out. Investors will fear the winner may be paying too much and we may see weakness in the three UK heavy weights in the short term.

A handle on the US consumer will be given this afternoon with the latest Retail Sales numbers at 13.30 with Business inventories at 15.00. Weakness in either of these figures will probably send the dollar lower again.

PPI in the UK at 09.30 is expected to be flattish but with commodities on the move once more we can forecast more pain in this area in coming months.

In the FX world the Yen continues to weaken against all comers as the prospects of further rate widen appear to have increased. Fears that the Japanese Banking sector have failed to solve their overhanging bad debt problems from the 1990's are beginning to be reappraised as the BOJ fails to give any (even vague) indications of being worried about the collapse in their currency. Japan continues to have one of the biggest GDP/Debt ratios in the OECD, and rate hike would seriously affect government finances.

As per normal the record (remember them) has got stuck and I must report on yet another all time high on the euro/yen, this morning at 161.83-161.86 (and I though 150 was impressive!) whilst Sterling is also putting on a good push at 237.40-237.48 up another 70 pips and threatening to move above the late February rally levels. We can still expect sellers above 240 but for the time being the bulls have the advantage.

Gold managed to break above 679 and hold the move with even a mid afternoon attempt to move down back into the trading range being swiftly defeated. Clients remain long (although not as heavily as in the past) and seem content to run with it for as long as the sunshines. This morning has prices at 686.4-687.0 up a dollar or so as the greenback weakens again. As mentioned towards the end of last week the odds on a move higher had increased significantly with each passing day as no pull back was in evidence.

Oil pushed up to an attempt on $70 (June Brent) in early activity on Friday reaching a high of 69.70 but the effort proved too much. June Brent fell some 30 pips whilst the US nymex only drifted a few cents, with the May settlement now on the way out we may see a contraction in the two contracts as a $2.50 difference looks excessive (mind you the May contract hit 550 cents!) June Brent is called at 68.80-68.85 up 20.

Having spent most of yesterday in negative territory markets took heart from a renewed surge in the US which has dragged Europe higher in late activity. Our clients appear less than convinced this morning with absolutely huge selling on the opening prices. If you are a negative indicator kind of player the temptation to buy would almost be impossible to resist. Clients have taken out the biggest short position in the FTSE that we have seen to date in just a few short hours after being almost flat yesterday afternoon.

This afternoon we finally see some US data in what has been almost a desert this week. The US trade balance will hit the screens at 13.30 this afternoon (London Time) and dealers will be gearing up for some fireworks. The dollar appears to be (finally) slipping with the Euro and Pound hitting new near term highs this morning and even the yen managing to keep pace for once.

Most companies would not wish to be making trading announcements on a Friday the 13th but Imagination Technologies (IMG) is not one of them. Revenue is up 35% meaning that losses have been paired back significantly for the year, in fact break even for the second half. Whilst the improvement is impressive investors may worry that a company that is not making money when the economy is nominally booming away may struggle if we experience a slow down. The shares are unchanged at 126.25p.

Sainsbury is back in the news again as Robert Tchenguis adds to his holding. With the Sainsbury family apparently calling the shots this may prove to be a risky move as without institutional support he will find it difficult to force his agenda onto the board. Citigroup recently announced that the actual par value of the shares should be in the mid 400's if just retail income is taken into account. A long way from the 582p CVC bid. Even releasing the asset value of the property portfolio may not be enough to push the price to those levels.

In the FX markets the pound broke through the 1.98 level early this morning and clients who had set up shorts were stopped out (with minimal loss) at around the 1.9815 level. Those who set up stop/reversal orders were sitting pretty when they turned on their computers this morning with the market all the way up at 1.9860 at 07.00. A bit of profit taking has moved us down to 1.9847-1.9850 now but this is still 65 higher on the close.

With the Euro continuing its inexorable rise (although at least slipping a bit against the Yen today) as markets ponder the almost certain June rise from the ECB we can expect further disputes from the 'Garlic Belt' about the fact that bank policy seems to be focused on North and East European growth and to be ignoring the woes of Italy, Spain and France. The Euro is now at 1.3522-1.3524 and as mentioned yesterday is looking good for an attack on the all time highs against the dollar above 1.36.

Gold is meandering around in the high 670's and since moving up to these levels a couple of weeks ago seems to be pausing for breath. An attempt to move lower yesterday was beaten off as support at 671 held firm and the dollar weakened. If we continue to consolidate at these levels the probability of a further move higher get greater. Rolling Gold is at 677.2-677.8 up two dollars.

Oil is squeezing again and as mentioned over the past few weeks our clients continue to try to pick highs and get burnt. Supplies around the globe appear to be weakening as the Opec production levels continue to fall. Inventories are now much lower than usual at this time of year although global demand seems flat. China is expected to increase demand significantly YOY for years to come but the West is actually demanding less as other power supplies come on line and energy consumption become ever more efficient. June Brent at 69.55-69.60 is up 60 cents this morning as the squeeze on the IPE contracts continues.

Yesterday started very quietly with a steady grind higher squeezing our clients who as mentioned had started to set up shorts in the FTSE. As the US markets opened the FTSE was at the highs of the day but American traders coming in seemed to be in a negative frame of mind and sold off as buyers hung back. This precipitated a 50 point drop in the FTSE (much to our clients delight).

This morning we are seeing client buying in most indices before the open in the UK with perhaps a few thinking along the lines of lock in some quick profits before they disappear! The Dax/FTSE spread is now over 700 points and there is a sense of disbelief at the unstoppable move that appears to be the German index. When you include the massive rally in the value of the Euro over the past year or so the trade weighted value of the Dax is phenomenal for such a mature market.

Whilst commentators are forever worrying about the rise in UK housing the equity markets are making property investment look like the wrong place to be at the moment.

Today sees the latest ECB rate decision (expected to be unchanged) and the UK Trade Balance (expected to be awful).

JJB sports sees profits up 14% this morning on sales up 8.7%. Emphasizing the uplift caused by the World Cup replica kit sales rather focuses investors minds on the fact that there is no such helping hand this year (or next if Steve Maclaren has anything to do with it!). Clients have been long of the stock for some time riding the powerful move higher since last August but we have seen a bit of lightening over the past week on the pre results rally. The shares are likely to be slightly higher on these numbers maybe hitting the 265 level.

In the FX worlds our clients are simply roaring away, as mentioned we have very heavy long term longs in gbp/jpy and yesterday saw day trader selling in Cable at around the 1.9800 level. The love affair with the carry trade continues unabated especially in the eur/yen where we hit new all time highs. The only bum note has been in the eur/usd where clients have been trying to call a top and have been slowly pushed out by the inexorable grind higher.

At 1.3473-1.3475 we are smack on the high recorded in Feb 2005 which will form an initial resistance but traders seem confident of a break through with the possibility of an attack on the all time eur/usd print at 1.3666 hit back at the end of 2004. As mentioned clients have been trying to sell the eur/usd all the way up but we may have reached a point at which there is at least a chance of a pull back. We can expect the 1.3480 resistance to be a tough nut to crack so technical traders will probably be tempted to set up shorts here with tight stop/reversals above the level.

Gold continues to attract buying but as mentioned we are seeing some profit taking at these levels. The pattern has been to wait for any pull backs to set up new longs so most of our gold punters are lightening positions, taking the money and waiting for another opportunity.

In the oil markets the squeeze on the May Brent contract continues as the spread widens even further against the US WTI contract. We can expect either a massive blow out move widening the spread dramatically or a sudden "what the hell are we doing up here moment" with a corresponding plummet. Your choice. For me the movements in the May Oil contracts are becoming ever more random so a wise punter would be advised to move out to the June contracts. June Brent is at 67.80-67.85 and Nymex is at 64.76-64.82. For the June Brent contract the support is at 67.80 (where we are now), 67.50 and then 66.50 whilst resistance is at 68.25, 68.45 and 68.70.

Unchanged/Unchanged/Almost Unchanged... Not much to go on this morning with M&A deals finally appearing to have run out of puff. Whilst a vast number of deals are speculated upon not much seems to be coming to fruition or even to be getting out of the starting blocks.

The Sainsbury family may be the toast of the anti Private Equity section of society but share holders may not be so pleased. The company may well be worth more than the 582p bid put in by CVC but not right now. The 600p 'show me the money' statement by Lord Sainsbury will have done his chief executive no favours. Any comparisons with the famous M&S 400p rejection of Phillip Green are wholly misleading as Stuart Rose had the good fortune to come in to take over a badly managed company just as the Stock market was coming out of a four year malaise. Neither of which is the case now.

Vedanta will be in the news this morning posting their 2006 finals. The numbers are expected to be good after Copper and Zinc output increased 15 and 23 percent respectively. The shares have had a rollercoaster year after the phenomenal 2005-2006 move but seem to have got back on track in recent weeks clients are good buyers at current levels.

Xstrata have extracted more than just their usual metal ore. They seem to have gouged out a top whack price for their aluminium unit from Apollo Management. $1.15 B is above most analysts’ valuations and the shares are likely to move higher on the open.

With no economic data out of the UK or the US today traders are looking for a quiet day. The FTSE is unchanged on the open (slightly down on the night session close) and in truth it is difficult to see where the momentum is going to come from this morning.

Sterling continues to build on the strength of recent days moving up against all majors overnight (even managing a move against the all powerful Euro). The Sterling/Euro cross has for years been a by-word in boring range bound trading but since the turn of the year we have seen a 1.5300 high and a 1.4560 low already matching the entire percentage move of the past two years. At 1.4736-1.4740 we are neither weak nor strong at the moment but dealers seem to have rejected (for the moment) the 1.4665 support level and our clients have been heavy buyers below 1.4700.

Cable is flirting with 1.9800 once more as the attraction of interest income continues to drag in punters. Whilst we have traded higher the market has not actually managed to close above 1.9810 although we have had three attempts in the last four months. Look for solid buying if i looks like we could be closing tonight on the strong side as short squeezing could get quite rough. If we fail to progress from here or look like slipping back from the resistance level then sellers will gain momentum. The current price is 1.9797-1.9800 and we are seeing some solid selling here with tight stops just above 1.9815.

As mentioned yesterday Gold continues to move slowly higher and higher taking out any remaining weak shorts. Our clients have (as mentioned here many times) been long for almost two years with the occasional sell off giving punters the chance to get in at better levels. At 677.0-677.6 we are up half a buck and we are seeing a bit of profit taking as punters ponder the 677 and 680 resistance levels.

Oil is unchanged this morning after yesterdays dismal opening. Whilst Nymex continues to look weak Brent managed some sort of a rally from the open and the close was only 75 cents down. Today looks to be quiet on the off but punters are selling Brent and buying the US looking for some sort of contraction in the unprecedented $5.80 spread. May brent is 67.50.67.55, May Nymex at 61.97-62.03.

Markets are being shoved backwards and forwards on statement and counter statement. The Fed having indicated that they were now in a neutral stance had this perception smashed down by Mr Bernanke talking about inflation being the big worry not growth or the housing market. The dollar which had been suffering all day promptly rebounded happily up to previous closing levels.

In the UK focus will be on BAT who seem to be tying up with those evil private equity guys about an approach for Altadis after they rebuffed Imperial Tobacco. This makes four major bid rumours involving FTSE 100/250 companies this week. The speculation around Next is a classic example. Effectively the retailers’ only real asset is its name and the continued ability to produce the products the customers want. Most shops are leasehold. In a serious consumer downturn Next with its heavy cost base would be one of the first to suffer. Talk is of a £25 bid but it may prove difficult for even the most bullish to swing this one.

This morning sees the FTSE called some 20 points higher having been called a similar amount lower at the close last night. Punters were looking a bit off line having bought into the fall yesterday but will now be sitting pretty and we can anticipate some quite relief profit taking on the open.

As mentioned BAT, Next and Imperial Tobacco are likely to be heavily punted this morning. Clients, very unusually, have actually managed to get short of tobacco sector stocks as the persistent rumours have driven the stocks significantly higher in recent months. BAT is likely to be up at around the 1585p level on the open and Imperial at possibly 2255p.

In the FX markets the strong Yen move yesterday has now been completely wiped out with the final push yesterday afternoon failing to find any further weak longs and the aforementioned Mr Bernanke's comments catching everyone on the hop. For many years central bankers played a quiet hand giving the markets all the information they needed and making very few surprising moves. In the past six months this policy seems to have been thrown away with sudden unexpected rate decisions and seemingly clear statements reversed. Markets do not like uncertainty.

Yen is now at 117.38-117.40 weakening 50 pips overnight versus the dollar and giving up 150 and 85 pips against sterling and Euro respectively. Clients were heavily long the Europe versus japan and there will be a strong sense of relief all round after suffering to falls of yesterday. The charts would still suggest that the Yen has broken its downward spiral but falls of the magnitude of this morning will bolster the carry trade purveyors.

Gold, although above $660, has the impression of being somewhat stuck in the mud at the moment, not quite as immobile as silver which has hardly budged in three weeks, but still looking for new directions. The weakness in the dollar initially helped the markets pushing prices to 669 but we are now back down at 664.4-665.0. The support/resistance level at around 663 will be giving bulls cause for concern as the break through here precipitated the move yesterday.

Oil is trading on news and is difficult to get any kind of a handle on. Iran seems to have made their point parading the UK servicemen on TV for the benefit of home consumption. The world is split into two camps. One side who believe everything the US and UK say about the Gulf States and the other who disbelieve it. This weeks spats will merely have bolstered both sides. If the current saga drifts to a close in the near future we can expect to see some sell off in the forward oil contracts.

Worldspreads looks overseas

IRISH spreadbetting operation Worldspreads is expecting its British division to make a profit this year after losing €1.6 million in 2006.

Accounts just filed for Worldspreads, which owns the Sport Spreads and Supreme Odds betting sites, show the group lost €1m in the year to end March 2006.

The group loss for the year is down from €1.6m in the 2005 financial year which is solely down to starting up its British operations which will make a profit in the 12 months to the end of March.

The company said its Irish spreadbetting division showed exceptional growth and made a profit before tax of €536,082.

"Since the year end the Irish operations have begun a joint venture in South Africa with the largest gaming group in that country."

"The joint venture will initially offer sports spread betting but may expand to financial spread betting once regulation issues have been resolved," the company said.

The joint venture is with the South African stock exchange listed horseracing and betting group Phumelela Gaming & Leisure. Worldspreads owns just 1% of the venture but will split the profits evenly with Phumelela.

The company is also expanding into Europe with betting underway in Greece, Spain and Hungary and it also plans to launch in Austria and Germany.

According to accounts the company had 30 employees at the end of the year, four more than in 2005.

Capital Spreads Market Commentary

The story today is all about oil. Oil rallied almost 5 dollars in a fifteen minute period last night as speculation of a failed UK rescue attempt hit the markets. Although the story was apparently bunkum the ripples are still being felt. The high on Brent May was around $69.10. The FTSE is being bolstered by the weighting of Oil stocks.

The oil move caused the Nikkei to reverse a strong opening to trade some 300 points down from the daily high before a late rally caused it to close just 100 off. The American markets were already on a bit of a slide last night and this further piece of bad news will not have helped opening levels this afternoon. The Dow is currently trading some 45 points lower than the close last night at 12354-12358. The Dax, which had been trading its own merry way yesterday evening, somehow rallying as the Dow fell has had a change of heart today. Although the opening is just 30 off the cash close at 4.30 we are actually 50 off the 9 o’clock evening sign off.

Sainsbury and Boots report trading statements today. Both are in the midst of bid speculation. Sales at Sainsbury were slightly better than expected but the share price has virtually no grounding in returns anymore so the effect on the share price will probably be muted.

Alliance Boots reported sales in line with analysts’ expectations but have upped their estimates on the savings achievable on the synergies of the merged company but again the share price is being driven by outside factors and the good news is likely to fall on stony ground. The management will presumably use it to bolster their attempts to keep investors onside in their battle with Mr Pessina over control.

The FX markets remain very quiet. In conversation with various desks across the city the volumes going across the boards this week are well down. The comment from one desk was "everyone is waiting for a break out". Dealers appear sure that the dollar will be sold off but everyone is waiting for some sort of trigger before getting in (having been burnt over and over again on dollar reversal rallies over the past few months).

The Yen has had a good night rallying across the board with the Euro/yen falling 70 pips to 156.61-156.64 today and sterling off 130 pips at 230.39-230.47. As mentioned yesterday the dollar had another go at the 118.25 level but failed once more and then broke out of the rising flag formation to the downside. We are now at 117.32-117.34 and traders are selling even as I write.

With the dollar weakening and worries over oil surfacing Gold is rising once more and we are now above the 663.50 resistance level at 666.3-666.9 up 3 bucks overnight.

Oil as mentioned above had a spectacular night rallying 500 cents at one point. As mentioned yesterday our clients have continued to attempt to sell into the rally and were sitting heavily short. Fortunately for them we were not actually quoting during the chaos in the early hours so they did not suffer the spike but are still nursing losses this morning on the open near the 66 dollar level. Fear is driving the price at the moment. A mis-step by the UK government could cause an oil crisis (which frankly, Iran would not mind too much as that is what they sell!) but a softer solution could have the price of black gold all the way back down again. "Place your bets gentlemen".

After the US led fall which took UK lower in afternoon trading the late evening rally meant that the US closed out almost unchanged on the day. The ability for investors to shrug off bad news and just concentrate on the good appears to be as unaffected as ever. As mentioned yesterday our clients were heavily short and made hay in the dramatic events over the housing data. having taken profits we are now seeing heavy selling again this morning as dealers oppose the surprising US late rally.

Cairn, as expected, reported a hefty loss of $82m after a profit last time of $79 on falling production. Hopes for investors are that output can be brought back on-line. Further delays could see further price erosion. Evolution, also under pressure, report later today and punters are more hopeful here as the appetite for M&A activity and the resurgence of IPO issuance should bolster numbers for the coming year.

Overnight we have two further bid announcements with Persimon coming in wanting to look at Taylor Woodrows books, (whilst we are about it can I have a look as well!) and Asda announcing an interest in Sainsbury. Our clients appear to be unhappy about an Asda Sainsbury tie in and we have sell orders on the off.

Currency markets are almost unchanged overnight after the dollar came under pressure from the poor housing numbers. The rally in Cable above 1.97 has also found sellers as punters feel happier being short of the pound at these levels. Trading was quite brisk overnight in very quiet markets which seemed to indicate a certain amount of decision taking in the small hours.

As well as shorting cable, we have heavy selling in the eur/yen at around the 157.40 region and in the dollar/yen at just above 118.00. Some of our bigger clients seem to be happy to oppose the carry trade at these levels. The dollar has found it difficult to close above 118.20, not just over the last month but also back in November. Sellers creep out of the woodwork on every attempt to breach these prices. On the other hand bulls will be eyeing the rising flag formation in the yen charts and will be prepared to run with any confirmed break and close above this level. The dollar/yen cross appears to be finely balanced for a heavy move in one direction or the other.

Gold managed to claw its way a touch higher yesterday on the dollar weakness but the move appears half hearted this morning and just for a change we are getting some bull position liquidation. At 663.1-663.6 (rather like the usd/yen) we are poised just below the recent 664 resistance level which seems to be holding us back. On the basis that it is better to let someone else force through a move a bit of judicious profit taking is not unexpected.

Oil blasted up again on a stream of low level bad news. 15 abducted UK servicemen may appear big news here but it is probably not on the radar for other countries so the likelihood of a major disruption over the dispute is unlikely at the moment. May Brent has rallied some $4 in just four days so clients are looking for a pull back. This is a dangerous activity as the one thing guaranteed to keep a grinding move higher going is the addition of 'weak' short position takers. The price is off 20 cents this morning at 64.25-64.30.

Another week and yet another bidder for UK plc.

It appears that Boots may have found another ‘beau’ chasing after her charms. With the share price already somewhat higher than the original bid there may be little further for the stock to go unless a firm contender joins the fray but 10.50 looks a pretty safe(ish) bet at the moment.

Taylor Woodrow and George Wimpey somehow managed to keep their own arranged marriage a secret from the markets, which says something about their advisers at least. Both stocks are likely to rise in excess of 10% this morning and investors may be looking around for further consolidation (it is only a few months since the Barratts – Wilson tie up). Some senior sector analysts may have a few questions to answer as to why this possibility was not commented on after the aforementioned barratts had shown the way.

The FTSE is trading some 10 lower this morning and we have seldom come in with such a negative client position. Traders with us are short of every single indices except the Nikkei. For those who like to attribute ‘sods law’ to every action this might cause some ‘contra’ trading activity.

Forex markets are retracing some of the dollar weakness this morning with the pound flirting with the 1.96 level and the Euro giving up on the 1.33 peaks falling 60 pips this morning to 1.3272-1.3274. For a change the Yen has held on this time as the European crosses have weakened and the rate at 118.06-118.08 is pretty much unchanged on Friday.

This commentator is wondering why he did not take his own advice and sell the Euro when it drifted below 1.3360 on Thursday.

In the precious metals arena Gold continues to hold bulls firm with the small sell off on Friday not enough to rattle. With the dollar appreciating this morning there is little European buying going on but far eastern investors continue to pick up the commodity on any weakness. Today’s opening levels are at 659.0-659.6 up 2 bucks. The major support levels are some way below here at 642 and 638 but there are two minor levels at 656 and 651 which should remain solid in today’s lacklustre activity.

Oil continues to climb higher after the Iranians managed to arrest 15 British sailors. If Mr Blair is unable to bring a swift conclusion to this little spat he may find that foreign adventurism yet again proving to be a poisoned chalice. Punters continue to try to call a high in oil but are being ruthlessly squeezed as I write. Prices in May brent are up another 80 cents this morning at 63.84-63.89.

Quietest day this month with the Dow just recording a 70 point range. No major corporate news out of the States after hours last night and no serious corporate figures due from FTSE companies this morning is likely to make for a very, very dull opening. Days with little information have tended to see markets drag lower. Existing home sales this afternoon expected to be weak at around 6.3m down 2.5%.

With Oil moving higher yesterday the FTSE may have been expected to be one of the best performers but a lack of any rumour of further acquisition seemed to weigh on investors after the initial spike higher on the open. In fact the opening prints proved to be the high point of the day which is likely to cause a serious fear that this retracement of the falls has come to an end for the time being.

The Whitbread story looks to be running out of steam as the £23 bid (mentioned in many wire stories) stubbornly refuses to raise its head. With many Private Equity funds now concentrating on the possibility of their own floats, after the Blackstone announcement, we may find that riskier bids are put on the back burner for fear of tripping up an IPO and the ongoing Sub Prime disaster may (but only possibly) cause banks to pull in their horns on the lending side.

Enterprise's numbers were disappointing in absolute numbers, recording a fall in net revenue. But this disguises a good number of one off costs. Sales were up 20% on the year, higher than expectations and this may cause an upgrade on expectations for 2007.

On the currency front the death of the dollar appears to be an ongoing story as 'Phoenix like' it rises from the ashes once more. The Yen is suffering again with the Euro cross now just 2 cents off the high print before the 'end of the carry trade' was announced. The Euro has now bounced fully seven points from the lows of March 5th and shorts are being squeezed on two fronts... price and (wait for it) carry costs (!!). As has been mentioned here many times ..the carry trade will not go away until rates become more aligned. A one off shift in the crosses may hurt short term speculators but true long term borrowers will be less concerned.

Cable had a peak above 1.9725 on the retail sales data yesterday but this proved to be a temporary victory and the rest of the day was dominated by tight trading ranges until 16.30 when support at 1.9660 was breached with caused an equally abortive move to the downside. This morning there are very light volumes going through the exchanges as we oscillate between 1.9625 (Support) and 1.9660 (yesterdays support now resistance). Current price is 1.9646-1.9649.

As mentioned yesterday the Euro was looking at the 1.3355 to 1.3365 support which held for most of the day before failing causing a swift drop to 1.3310 before buyers came in once more. The high of the 16th at 1.3340 is now creating some resistance to a move back up and we have sellers at this level.

On the commodity front Precious metals have now recorded seven up days in a row (admittedly none of them have been huge but in Gold this has meant a rally of some $20 and in Silver 60 cents. The moves seem to be getting harder and harder and in this scenario this generally means we are gearing up for a big breakout in one direction or the other. The pressure is to the upside and so a sharp move higher remains the biggest probability but a break of the trend could well give the bears the best opportunity for a while to shove price lower.

Oil finally shoved higher with dealers getting on the back of the break of the resistance level at 61.35 (may Brent) mentioned yesterday to push us 140 cents higher on the day to 62.50 where we remain this morning.

"The Lord giveth and the Lord taketh away"

Obviously our esteemed chancellor has been an aficionado of the latest Hollywood craze for illusionist films. With sleight of hand he removes a headline tax whilst quietly failing to mention the delayed rise in NI thresholds and the abolition of the 10% starting band.

On a quieter note the Manchester Casino consortium may be less ecstatic this morning after a truly awesome hike in Treasury tax take. It is difficult to see who is going to come in to make the monumental investment required if 50% of Gross Gaming losses are taken straight off the revenue side.

Punters have fallen into two entirely separate groups. Our indices traders were, in the main, caught completely on the wrong foot by first the Corporation tax cut in the UK and then by the Feds apparent easing of intentions. But our individual equity traders were entirely the other way round, going into the close lat night we had not one single net client short on FTSE 250 stocks.

This morning sees the FTSE coming in at around 6330-6331 some 75 points higher and bang on the pre ‘last gasp’ rally high of January. Clients are still selling as we go higher as there are a plethora of small resistance levels just at this level and up to 6375. On the down side there is not much until 6300 and then 6240.

The Feds ‘announcement’ of a move to a more accommodative stance has given the indices a strong boost. Although investors might be more concerned to remember that the last time the Fed was easing rates the Dow and S&P were at the beginning of the three year 2000 to 2003 bear market.

The Dow is about 150 points up on the close on Tuesday, not a huge move but enough to excite.

Sterling rallied and fell and rallied and fell and rallied again yesterday as conflicting reports drifted across traders’ screens. The hurdle of 1.9625 seems to be overcome with little difficulty and with the dollar looking decidedly on the fragile side dealers are not exactly crying out to sell the pound at the moment. The next resistance is where we are now at 1.9680 and then 1.9740. Current price is 1.9672-1.9675.

As mentioned yesterday the Euro was struggling to overcome 1.3330 but the dollar weakness turned this resistance into a paper wall and the cross rate shot up at 19.15 last night to hit a new two year high at 1.3400 exactly breaking through the previous 1.3364 recorded back in December. Unfortunately we are now drifting back to this level and are currently sitting at 1.3367-1.3369. A move back below 1.3364 will drag in profit taking but whilst we continue to hold above it buyers will continue to be attracted.

Gold moved higher on the dollar weakness but it is always dangerous to rely on currency related moves. For a Euro based holder of Gold the recent rally has been decidedly less impressive. At 665.7-666.4 the rolling gold price is up 2 bucks this morning but we are running into solid selling from longs looking to lock in profits.

Oil moved higher on inventories showing lower stock than expected but we still failed to break out of the current trading range. Yesterday’s price action actually managed to open at the bottom of the ‘closing level’ range and close at the top of it. Bulls will be hoping for a close above 61.35 (and hopefully above 61.70) whilst sellers will be hoping for a retracement of the 60.40 – 61.35 range. The current price is at 61.26-61.31. All prices refer to the May Brent contract.

The FTSE is called some 15 points lower this morning but 9 of these are just dividend payments coming out. The price at 6205-6206 in early calls is still above 6200 and investors may be willing to wait for the Budget this afternoon before taking further action.

Hopes for a Corporation Tax cut may be a bit optimistic but if they happen would make a direct impact on the bottom line and could cause a nice little boost to share valuations. One of the main reasons why the UK plc has not been such a big player in global acquisition is that, when compared to their European counterparts, they have a much bigger slice of pre-tax profits taken away. Over the years this means that cash piles/gearing for a UK company are that much lower and it makes sense for anything other than finance to be based and taxed abroad.

Yesterday was looking (around midday) to be a distinctly off trading session with the FTSE 35 points lower but afternoon buying in the states and a surge in Gold turned the markets around. The Dow eventually closed some 60 points up. Traders are cautious of taking prices above here because, since the fall out on the 27th Feb, we have had three attempts to move up all of which failed at the same price of around 12340. This level was also the site of a 250 point reversal in November last year.

Aside from the Budget in the UK the main talking point of the day will be the FOMC rate decision in the States this evening. The only surprising thing will be if they move. Most indicators are slightly negative but there are enough positive ones to give the Fed the excuse to do the easiest thing which is to sit on their hands. The markets are giving a rate cut an almost 50/50 chance by June/July but not much probability today.

Tullow release their full year figures today. The numbers are not as stellar as the first half boost due to the timing of the oil price rises in 2005 but are still impressive with earnings at 157m up from 113m. Production for 2007 is expected to be 80k bpd up from an average 64.7 bpd in 06 so the company is almost assured a further hike in revenue for this year.

Barclays announced the strange face saving ‘Board in Amsterdam’ deal for ABN whilst retaining all actual controls in the UK. Given that most of the actual board members will be in London one can assume that this state of affairs would only last as long as was deemed polite before a terse withdrawal back to blighty.

How are the mighty fallen. HSBC gives a buy recommendation on BP but in a generally bullish day the share price dropped! The legal/regulatory news coming out of the US over the Texas city explosion continues to make bad PR but this may indeed be about as bad as it gets. Safety inspections, by their nature, are often arse covering exercises so the release to the press of internal inspection reports may make good headlines but are not, in themselves, damning. Probably every single Oil refinery inspection report for every single company in the world highlights things that in an ideal world should be dealt with.

In the FX markets the pound has risen from the ashes and powered through resistance levels against the dollar. In the light of probable inactivity from the fed, this evening, the other higher yielding currencies are making progress against the greenback. The Euro continues to batter against 1.3325 with 1.3340 and 1.3360 as the next target levels for bulls. If we break and close above here the way will be clear for further euro appreciation. We are currently sitting at 1.3312-1.3314 and we could be in for fireworks at 19.15 this evening. A failure for a forth day in row to break higher would convince more dealers that we may have reached a temporary high and will increase the chances of a pull back to the 1.3250 level.

The yen managed to recover from the opening weakness yesterday and rallied against the dollar but this morning is giving this up to be trading at 117.45-117.47. The dollar rally petered out at 118.00 which means that the last four moves higher have failed at lower levels. It could be this falling expectation scenario that creates a renewed attack on the dollar rather than any individual piece of news.

Gold broke through the resistance level mentioned in yesterdays comment and immediately moved higher. Clients remain long and were quick to come in on the buy side on the break out. Traders will be looking for some follow through today but even without an immediate supporting move the general dollar weakness is not harming the prospects of a precious metal rally either.

Oil has now closed in a 35 cent range for four days in a row and this morning looks to be pretty much the same. We have the inventory numbers this afternoon at 15.30 but in reality unless we close below $60 or above $61.25 (in May Brent) traders are unlikely to be rushing into any positions.

Recent history would suggest that after a couple of nice strong days on the markets we will have the opposite today! Markets seem to have got into the habit of moving in one direction for two or three days and then reversing.

Clients have been doing exceptionally well over the past week holding onto FTSE longs and as we speak are buying on the small dip on the open at around the 6185-6186 level. Small shorts have been put in place on the US markets at the close last night but in reality all the indices look strong and investors (and private equity) do not seem to have been put off by the sharp falls at the end of February. For those with a historical bent the price action in the FTSE 100 looks unnervingly similar to the activity of last May.

Almost no major corporate news is due out today but with the UK CPI and various money supply and public borrowing figures out at 9.30 Sterling could be in for a bit of fun. There is not much due from the states either with housing starts being the most interesting at 13.30.

In the currency markets the pound is moving towards the top of its recent trading range at 1.9483-1.9486 up 40 pips this morning. There is some small resistance at around the 1.9500 level (or just higher) but, as with yesterday, the trend seems to be in sterling’s favour just at the moment. Against the Yen the performance is even better up 130 pips at 229.71-229.79 fully 850 pips higher than the lows on the 5th. There was some quite serious resistance levels at 228.60 and 229.00 which we have overcome with little effort and traders will be looking for a potential move back into the 230’s.

The Yen is coming under renewed pressure this morning with dealers eying the heavy resistance level at 118.25. The current price of 117.89-117.91 is bang in the middle of the volume resistance/support level of Sep/Nov. A break and close above 118.25 would open the market up to a move back towards the 119.75 ‘shoulder’ of October.

It is difficult to think of anything interesting to say about commodities this morning as they seem to be stuck in a very tight range. Yesterdays high low on Gold was just $4 (656-652) and today is bang in the middle of this at 653.8-654.4. Recent comments remain good for today. A close below 651 would indicate a short term failure to move higher a close above 656 will bring more buyers into the market on hopes of a retest of 688. Between the two and dealers may as well sit on their hands or hold onto current positions.

Oil is similarly lethargic. Today is unchanged from yesterday which was marginally up on the day before which was marginally down on the day before etc. Support remains in May Brent at 60.00 and near term resistance at 61.10 and 61.30. The current price of 60.70-60.75 is nicely poised for either direction but we may have to wait for tomorrow’s inventory numbers before any real movement is seen.

So, the discussion between those who feel a big reversal is in the offing and those who argue that the latest fall is a classic buying opportunity continues. Today is the bulls turn, with the Nikkei soaring over the weekend and most Far Eastern markets likewise climbing strongly the Dow is called fully 50 points up on Friday's close with the FTSE up 35 and the Dax up 65.

Coupled with this is a strong commodities market and yet another failure of the Yen to fulfill the doom laden 'end of carry trade' prophesy of recent times. In fact the more likely recipient of this accolade is the Swiss Franc which has had its seventh rate hike of recent times (as opposed to the Japanese's one). Who cares you might say, well rather a lot of Eastern Europe is the answer. Whilst many UK borrowers have been borrowing against the Yen the currency of choice for the Poles and Hungarians has been the Swiss Franc. So much so that over 75% of all mortgages in some countries are based in that currency. The Currency has been rallying versus the dollar as well, although fortunately for the Europeans it is still looking a bit weak versus the Euro. Should the Euro start to lose ground against the low rate economies then there may be a serious squeeze on Eastern European consumers.

On the corporate front Wolseley has beaten expectations with profits of £330M and the shares should at least make up the drop of Friday. The profits are still down some 8% on last year as the US housing slowdown starts to bite but the shares have so far ridden this fear out with the falls from the highs merely reflective of the markets move as a whole. As previous commentators have said about Wolseley the main reason for the phenomenal growth has been a truly outstanding management team who seem to be able to manage strong organic growth with reasonably priced acquisitions. The only question that may be over the numbers is that they have made over 30 (small) purchases during 2006 which do not seem to have added, yet, to the bottom line.

Forth Ports, another strongly performing stock, (although this time more from revaluation reasons) has also reported earnings but this time the numbers are not so encouraging. Revenue from ongoing activities are up just 5% barely ahead of inflation and Profits have fallen to 55.6m from 58.3m lower than expectations. The property portfolio remains the greatest asset on the books. Various planning permissions are being applied for and the value of the shares depends to a certain extent on some of these being approved. The shares are opening 25p lower at 2065p.

In the currency markets the Yen is having a tough time of it falling against all of the other majors this morning. Strong growth, both consumer and economic, remains elusive for the Japanese economy and for every two steps forward we seem to slip one back. There is always the underlying feeling that the bad debt situation of the nineties has still not been sorted and that this is the reason for the reluctance of the central bank to raise rates. At 0.25% the main banks can quietly write down the debt over a very long period but at 2 or 3% this would prove untenable. Combined with the fact that the government itself has a huge deficit and one can see why the carry trade may have longer to go than is forecast.

Sterling is perky this morning versus the crosses even managing to oppose the Euro in early activity. The support level of 4.4570 against the Euro has held for the third day in four which will come as some (possibly temporary) relief to Sterling bulls. Exporters will be happier though as the strength of January was seriously damaging to the winning of European business. The current price at 1.4615-1.4619 is getting some cautious buying from some of our clients (probably looking to hedge house purchases on the continent).

Gold continues to try to build on the recent fall out with bulls still buying any dips. There is a minor closing resistance level at $652.0 which we are trading above at the moment. A close above here could well give the momentum needed for an attack back up once more. Another failure will cause some disquiet amongst longer term holders. Whilst there have been some serious fall outs over the past year or so the overall chart direction for precious metals is undoubtedly positive and only a break below 635 and 610 could give the hedge funds some cause for concern.

Oil remains, frankly, rather dull. With all the interest elsewhere the petroleum traders appear to have been taking something of a holiday. The total range for the last few weeks has been contained in a few dollars. Fridays close threatened a move lower but the weekend has seen buyers back with a bounce. May Brent is now at 60.73-60.78 with support at 60.30 and 59.50 and resistance at 61.25 and 61.70.

Finspreads – Novation of Account

Clients of Finspreads have received the notice below, expected after City Index and IFX Markets (which formerly operated Finspreads) have merged.

As you may be aware City Index and IFX Markets, which includes Finspreads, have joined forces. As a result, on the 31 March 2007, IFX Markets Ltd (IFX) will be undertaking a legal transfer of your account to City Index Ltd (CityIndex).

Please click here to see a letter that tells you exactly what the changes are and what you need to do in order to ensure that your open positions and your account are moved across to City Index. Please read this carefully. We have summarised the main points below.

What does this mean for you?

This move should have very little impact on your relationship with Finspreads. There will be no change to the Finspreads client services or trading team. Your Finspreads trading platform will remain the same as will the terms of your customer agreement.

The new City Index customer agreement is an exact copy of the existing IFX customer agreement for Finspreads, the only difference will be changes to the references to IFX reflecting the fact that your counterparty has changed to City Index.

You will continue to trade with Finspreads, which from the 31st March will be legally owned by City Index. City Index was established in 1982, and is a leading provider of CFD and spread betting trading services.

What do you need to do?

N.B. If you have an open position(s) and we have not received your consent to the novation letter and varied customer agreement, your account will be transferred to City Index and will continue to operate as before until we receive your acceptance or non-acceptance of the novation letter and varied customer agreement.

If you wish to discuss the transfer of your account please contact the client services team on 08000 96 96 20.

Capital Spreads Market Commentary

My opening comments of early yesterday morning rather summed up the day..."markets looking fragile"..."bouyancy...draining away".

The FTSE having fallen 50 or so yesterday is looking to open another 80 down this morning at around 6077-6078. At the risk of sounding smug my harping on about Sub Prime problems in the States over the past week or so have come to be prophetic.

It looks like another blood bath in the equity markets on the open and clients can at least be pleased that they are trading in a market which allows shorting just as easily as buying. Spread betting may have is detractors but in the current environment its strengths shine out against the 'normal' markets.

The Dow eventually closed 250 points off and this morning is opening a further 30 lower at 12053-12057 (although by the time I finish this report it will probably be 20 points away from this!) and the Dax is off over 100 at 6518-6520.

Yesterday saw several companies come with poor numbers and we may find that this is a feature of the near to medium term. Analysts have written in increasingly unrealistic revenue targets for many S&P and European stocks and if there is a slowdown or a credit clampdown a major re-rating may be in the offing.

As feared Sterling is the main loser of recent days. The increasingly strained financial situation both personal and public indicates that the current BOE squeeze is having an effect of rather greater magnitude than the minor rate hikes to date. The trade balance is sharply down on falling imports which shows lower high street demand whilst the supply side dominated boom in housing prices reflect almost desperation rather than sense. If the BOE does raise again many commentators fear that it could precipitate a very sharp slowdown in the UK economy already dislocated by the increasing south east/rest of the UK divide. Financial institutions will continue to allocate units to London whilst at the same time the high corporate tax regime drives domestic business abroad and deters foreigners from setting up here.

Cable is down at 1.9224-1.9227 off 65 pips vs the dollar whilst the Yen and Euro are slightly higher (!) at 115.90-115.92 and 1.3199-1.3201. Cable has broken the 1.9255 minor support and is just above major 1.9175 and 1.9200 levels. A close below 1.9200 or a trade below 1.9175 could indicated the next big shift in the currency. Sterling Euro, normally a reasonably stable cross has now fallen 7 euro cents in just seven trading sessions and is now at an eight month low of 1.4580-1.4584.

Even Gold (often sited as a port in times of trouble) is struggling against the fall in asset values and is back at 642.3-642.9 and finding few new buyers although the bulls are clinging on to positions built up over the past week or so hoping for a bounce.

Amidst all the mayhem Oil is being remarkably stable. Since the start of all the market turmoil on the 27th Feb the trading range of April Brent has been from $60.00 to $62.70 with actual closing prices between 60.60 and 62.40. Today sees no change on yesterdays close at 61.00-61.05 and in the absence of any startling information over the inventories this afternoon it will likely remain a benign oasis for this morning's session.

Markets are looking a little fragile this morning after trading in a range bound pattern yesterday.

As per yesterday mornings message the increasing problems over sub prime lending in the states may yet affect confidence in the wider market and the massive trade surplus from China for February (fully 9 times the number from last year) means a continued outflow of funds from the US and Europe. One of the underlying problems for western manufacturing is that as Far Eastern produce eats into their market place the actual costs of doing business rise. Raw material prices, pushed by Chinese and Indian demand, go up, legislation, both regulatory and employment based, gets tougher, borrowing rates are higher etc etc all combine to make margins lower on a shrinking share of markets. No wonder manufacturers are shifting production Eastwards.

The FTSE is called unchanged this morning which is disappointing as the closing estimates last night were for a 10 point rally. Our clients are marginally long of the UK but heavily short of US and Europe. In early activity we are seeing some further selling with the buoyancy of the last few trading sessions seeming to be slowly draining away.

The FTSE is at 6231-6232 the Dax at 6715-6717 and the Dow at 12296-12300 all pretty much unchanged. My little Fibonacci comment of yesterday seemed to hit a few chords as the technical 61.8% retracement was almost the exact high point of the price action in yesterdays session.

Computercenter released a falling profit to 18.9m which will not please investors. The worrying part of this is that total sales were flat once more. On multiples of 16 times it is difficult to justify buying into a flat revenue scenario.

HMV have now almost a full hand of profit warnings. Announcing that profits will be below what were already pessimistic forecasts is unlikely to make Simon Fox’s tenure any safer. With sales down 3% the company is fighting a losing battle in the battle for market share. In an increasingly fragmented popular music environment just trying to identify a winner is becoming difficult. Back catalogue prices have hardly moved on the shop floor as the company cuts prices on ‘chart toppers’. When the basic raw material for a cd costs just a few pence buyers are baulking at forking out £8 to £14 for a nice shinny shop wrapped item. The shares are likely to fall over 10% on the open and the rejection of the private equity bid last year looks ever more foolish.

On the FX front the resistance levels mentioned in yesterdays comment held beautifully. 1.9450 in Cable proved the high and the Euro is struggling to break through 1.3190. Sterling is making the odd rally attempt but is generally drifting lower on an overall basis. Versu the Euro it has fallen from a mid Jan high of 1.5300 to the current 1.4650-1.4654 and if we close below 1.4640 the way could be cleared for a move down to 1.4350 of even 1.4235.

The Yen is moving up again catching a few shorts out. At the moment it looks to be not worth buying above 118.00 and not worth selling below 115.50.

Gold had another boring day with a short lived attack to the down side before closing unchanged (which is where we open this morning). We still need a close above 655.0 to get the bulls going and below 644 to tempt some selling. Whilst the action remains muted we will see continued profit taking from our clients (as the cost of holding long positions in a non interest paying product can be steep).

Oil had a go at the support at 60.00 in April Brent but the attempt was pretty muted petering out at 60.20. We need to close below 60.50 before the longs get seriously worried. The current price is 60.95-61.00 up 20 cent on the close.

Another good opening for the markets as the weekend press expressed confidence that the recent fall out from the worldwide equity markets will do no damage to economic growth. Whilst the static corporate financial, borrowing versus capital, side of the equation has hardly ben dented with most share prices still well above the start of the year the same cannot be said at the sub prime lending end of the market. It is a harsh truth that in recessions it is the lower end of the social scale who suffer the most, those with few skills to sell. But if we turn this argument around might it not also be this same section of society whose emerging woes may be giving us an early warning of problems ahead. You can bet your bottom dollar that in the light of poor mortgage lending performance many banks will be tightening credit criteria across the board. Perfectly solvent concerns will be asked to pay more for their money or just not get as much money as before. This type of squeeze can create its own 'domino effect' where higher security requirements creates lower growth which creates more debt problems which creates higher security requirements etc...

Anyway enough of these possible problems ahead. Today is most definitely a plus day with traders building long positions on the open looking for another payoff. Boots will be opening close to £10 this morning on confirmation of an almost certain bid at that level. If Mr Pessina, already a board member, thinks it worth that then the potential for a third party competition cannot be discounted. Confirmation from the Mining companies that demand from China continues to power along will mean that Anglo, Rio, Billiton etc will open higher this morning and with the share buyback announced by Anglo not harming things either the sector look solidly underpinned just for the moment.

The Americans have changed their 'daylight saving' time dates for the first time in a generation this year and have moved the turnover date forward by three weeks. This means that instead of being a week later than Europe in their changeover they are now two weeks earlier. Is it beyond the bounds of reason to expect politicians to get together on these things and regularize them across the globe?.

The FTSE is opening 28 up at 6273-6274 which marks a rather neat 61.8% Fibonacci retracement from the recent high, low move. Technical traders will be looking to set up shorts at this point whilst more positive traders will be watching the 6305-6320 target range. The fact that the index has managed to power through the 6190 to 6245 congestion region with virtually no trouble at all will be concerning any bears out there.

The Non Farm Payroll number was leapt on with shouts of glee as an indication that things were not as bad as feared. But in reality the number was not exactly wonderful. Just a few thousand above expectations and a bit of an improvement in last months release. The reaction of the market was more of a reflection of fear rather than studied decision making. So many dealers were afraid that the figure was going to be dire that the actual release was almost a relief. The rose tinted view of economic data continues unaffected. The Dow has now rallied on virtually every data release since the fall out, which had nothing to do with US official info but was triggered by the fall out in Shanghai and a reappraisal of an old speech by Greenspan, this is in spite of the fact that virtually every number has been worse than analysts forecasts.

The currency markets continue to trade aimlessly (again the Yen aside) with the Euro pinned to the 1.3080-1.3190 range and the Pound pushing first one way and then another. Traders are very wary of buying sterling above 1.9400 as this is the bottom of the Mid Jan to Feb trading area and there is further resistance at 1.9450. On the other hand the pound is finding favour as a reasonably strong, high return, asset area. At 1.8385-1.8388 we are seeing day trader sellers.

In the Euro the lack of activity seems to be driving punters away as the range traders take hold. When we approach the 1.3080 level the volumes increase and at 1.3160 and above we see sellers but in the gap in-between nothing much.

The usd/yen is now back above 118 and fears of the end of the carry trade seems to have been put away in their box for the time being. For all of the weight of money that is apparently running on the cross rate the fact of the matter is that in FX terms for every long there is a short and for those who have borrowed in Yen at virtually zero percent the fluctuations in the currency probably seem a small problem.

Gold is moving up as commentators rally behind the metal. It is curious to see a market where virtually every analyst/broker/journalist or whatever seems to only have one view. No doubt they are probably right but investors should beware unanimity of interest. Gold is up $5 this morning at 653.2-653.8 after buying in early trade from the Far East. Resistance remains at 655 and we really need to close above here to confirm the recent stability. All the momentum indices are positive the trend lines are positive and the supply side appears price positive so why are we not at $800 already? There is obviously another variable to be considered here. Gold, in reality, is just another currency and not a particularly rewarding one at that (think Yen return values). Yes it is also a manufacturing commodity which uses up a certain percentage but still for all of the rallys of recent times in the very long run just about any other asset class would give a better return.

Not much to go on this morning with virtually no economic or corporate news out. Dealers will just have to focus on the rate decisions yesterday and the Non Farm Payroll this afternoon.

The FTSE is opening slightly lower at 6213-6214 in light trade with Glaxo and Kazakhmys (no matter how many times I write that name I always spell it wrong) the biggest fallers. Our clients have rather neatly caught most of the rally back up and haven’t been tempted yet to try to short in anticipation of a drop back down. This morning sees something of a profit taking situation as not many are keen to sit through the lottery of the US data this afternoon.

Whilst the US markets had a reasonable day yesterday they have lagged the European recovery to some extent. The FTSE has recovered over 50% of the drop whilst the US has only managed about 35%. Analysts may be reasonably sure that there is no serious dislocation to the world economy but investors are still reeling from the after-effects. It will take some serious consolidation before new funds are placed in the markets as has been shown by the failure of two high profile funds in the UK to fill their expected allocations.

The Dow is off 11 this morning at 12267-12271 after a late rally saw us close almost 70 points higher yesterday. Unless markets get nervous before the afternoon figures we are not expecting much activity until then.

The Yen continues to weaken against all other major currencies (it is curious how the reams of articles written last week about the death of the carry trade appear to be silent on the rebound this week). As mentioned over this week the fact that there has been a small reversal in the fortunes of the dollar/euro/pound versus the yen does not negate the fact that the carry trade still exists in tempting enough size to cause the activity to persist. In no small measure this is a factor of the fact that any Japanese citizen sitting on cash is getting absolutely nothing for his/her assets. Merely converting them to dollars ensures a 5% return with a risk of currency devaluation. Many will see this risk as worth taking.

The Dollar/Yen is now at 117.59-117.61 which is quite a critical level as it signifies the bottom (support level) of the high volume trading ranges of November, September and march last year. This may take some effort to break into and through so it is likely that short term longs will be looking at this level as a profit taking point. The Euro briefly gained from the rate hike but obviously too many traders were long and the subsequent profit taking took the cross against the dollar down towards 1.3100. The support at 1.3110 built up on Wednesday held firm and the market gently drifted back up in low volatility action to the current 1.3144-1.3146. The Eur/Usd is very much stuck in a tight trading range within an overall barrier. Since April last year the cross has traded essentially between 1.25 and 1.33 with a heavy volume region between 1.2750 and 1.3000 (just 250 pips). We are currently oscillating around between 1.3080 and 1.3230 where we have been stuck for the last month. Our clients have enjoyed trading the range but are in the main aware that a break and close outside these parameters may indicate a move into a new range.

Gold is unchanged on yesterday in very boring activity. There is nice support now at 650 and 647 and good resistance at 655. The easier direction is to the upside as there is little volume activity between 655 and 675 whereas below 647 is far more congested. The current price i