Financial Spread Betting News

Dublin-based spread betting company WorldSpreads has said it expects its pre-tax profits for the six months to the end of September to be 'significantly' ahead of expectations.

In a trading update, it attributed the performance to faster than expected growth in customer numbers and trading activity.

'The group's London based operations are ahead of expectations while its Dublin-based operations significantly exceeded forecasts in all key areas,' it said.

WorldSpreads acknowledged that volatility in the markets had also helped the performance, but said it was still confident about prospects for the second half of the financial year.

The company last month raised €8.6m after floating on London's AIM stock market.

The group was co-founded in Dublin by chief executive Conor Foley and Brian O'Neill in 2000. It started with spread betting on sporting events but has now expanded into the financial sector, including foreign exchange and futures and options.

News overnight that Northern Rock seems to have acquired a suitor has boosted the banking sector no end this morning with the FTSE opening almost 50 points higher on, frankly, not much else. Although Barratt Development's numbers have also re-emphasized the strength of the uk housing market (presumably giving a better rating to NR's mortgage portfolio at the same time).

Alliance and Leicester are up 30p, Barclays up 10p and RBS 7p presumably on the basis that if NR can find a buyer then what price the rest of us.

The FTSE is trading at 6449-6450 as the trendless volatility continues. One day 70 up the next 70 down. Clients went home nicely long of the index and this morning are happily taking advantage of their good fortune and closing out.

Barratts came in with nice numbers which have lifted the stock by 20p this morning but are understandably cautious about the future impact of tighter money. Forward sales appear to be strong which is encouraging.

The Dow spent another quiet day trying to go down before eventually dragging itself higher and expiring almost unchanged. This makes five days in row where the market has closed within a 50 point range which given the current economic situation seems rather unbelievable. Volatility on the options markets is being slashed as sellers drive values down but buyers of volatility still seem happy to pick up protection. The American markets have now moved 50 points higher overnight and traders will be keen to see whether a concerted attempt on the 14000 level in the Dow can be reached again. The last attempt was the high water mark just before the selloff.

In the FX markets the pound recovered it losses yesterday only to be sold off again this morning. The air above 2.0200 seems to be a bit thin at the moment and traders seem keen to short whenever we approach the mark. On the other hand 2.0100, 2.0000 and 1.9950 (all big psychological numbers) are supply support. There is short term trend support at 2.0125 which may come under pressure today if the sellers continue to take the upper hand but at 2.0150-2.0153 we are some way from here at the moment.

The Euro continues to sweep all before it and vs the pound we are approaching the massive 1.4240 support again this morning. The Euro is almost certainly overbought at the moment but merely saying this does not a bear market make. At the moment sellers of the Euro are being kept on the back foot as traders probe for new highs against the dollar (another one yesterday) and even the recent strength of the yen has only served to slow the gains not reverse them. Eur/yen has major resistance at 162.80 and with the cross now at 162.61-162.65 traders can be looking at either selling as we approach the resistance or buying if we break through with tight stop-reversals if the expected move fails.

Gold continues to look strong which is rather surprising given that the dollar appears to be stabilizing and the equity markets are still recovering. Obviously there are a number of people out there who are not quite sure that we are out of the woods just yet. yesterday (as mentioned) we opened lower but our clients just came in and bought more below 726 and all the way up to the current price of 731.2-731.8. A bit of caution may be advisable up here as this is still the general area where we failed last year and the market just at the moment is struggling to make new highs. This is not to say that the bull run is over it is just to indicate that the market appears to be turning over in the short term.

Oil traders who read my comment yesterday will have been in prime position to take advantage of the fall. On the break of the support at 78.25 the price dropped over a dollar in the next 30 minutes! Giving a nice little earner to traders who were in on the ranges. Today sees oil pushing higher but is still below what is now trend resistance (rather than trend support) at (now) 78.60. We bounced nicely off 77.20 yesterday and bullish traders will be hoping to see this turn into a volume support level in coming weeks. Inventories are out today in the stated at 15.30 which will probably define the immediate direction and punters are advised to be flat before this.

Received this e-mail today from CMC:

Dear Client,

CMC Markets is once again pleased to announce that we are enhancing our product offering. On Thursday 6th September 2007, we will introduce the following changes to Marketmaker®:

If-Done Orders

You can't always be watching the markets so Marketmaker® now offers If-Done orders to help you plan your trading. Using the new If-Done ticket, you can place contingent orders to help your trading strategy.

An If-Done order is a way of linking two conditional orders together, so that if one of the orders is executed, then the other order is placed in the market as a result. For example, a trade may use a stop-buy order to open a long position with an associated stop-sell order to limit any potential losses. Therefore, if the stop-buy order gets executed, then the stop-sell order is placed in the market. However, if the stop-buy order is not executed, then the stop-sell order does not become active in the market.

This is nice development. They have had it on the CFD platform for some time and finally migrated it to spread betting.

Markets opening on the softish side this morning but given the worries swirling through the weekend press this must be considered a plus!

The banking sector as such a heavy preponderance in the FTSE 100 has had something of a dragging effect in the last nine months to say the least and after the Northern Rock debacle there will be a goodly number a people watching for the next domino to fall. If a bank with absolutely no actual bad debt problems can effectively go under a whisper here or rumour there may do for a much bigger fish if the BOE is not careful. Bob Diamond's swift, emphatic and decisive response to Barclays' small problems a few weeks ago may be seen as the formula to follow.

The early call on the UK index is for a fall of 15 points to 6274-6275 and dealers are truly in two minds this morning. In pre-market trading we are seeing buyers and sellers matching each other off in constant activity. On Friday aside from an attempted break at Mid-day the 6220 support held firm and an early move higher in the states settled nerves before a cautious sell off in late activity (day traders not happy to hold over the w/e).

In the absence of any actual bad news we may expect buyers to come in on the off this morning but if this fails to materialize then dealers could start to look for reasons to sell. It would not take much to spook the markets once more as the negativity pervading dealing rooms cause market makers to be loath to hold anything much on their books. Book runners would have a difficult conversation with their treasury manager if they reported losses on long positions in the current environment. This is causing rather heavier moves on light volumes.

This week sees the US banking giants giving their qrtly reports and even for these massively important numbers there can seldom have been a time in recent history when the releases can have been so important or so heavily watched. Even the credit departments of the banks themselves will be dissecting the numbers as they try to find out who is at risk from the downgrading of previously highly rated paper.

Greenspan's comments over the weekend do not make very nice reading as he ponders his legacy and the state of the world economy. Whilst the overall outlook appears fine the prospect of a resurgence of inflation will be casting a gloom over the . Unnoticed by many Chinese inflation is now heading for over 7% and with half the world relying on imports from their production lines this does not bode well.

UPDATE... markets have opened a good deal weaker than expected and the sellers are in command at the moment as with Friday everything UK is getting hammered on the open and who can blame investors for this view.

On the FX front sterling is under pressure once more and we are flirting with the 2.00 level vs the dollar. There is naturally some support here but longer term if the banking crisis gets much worse, then (for all of the value in sterling high interest rates) we may be in for a good old fashioned run on the pound. In this scenario some longer term holders are looking for the exit sign.

Sterling/Euro is simply dropping like a stone. We are now at 1.4420-1.4424 which makes for a drop of over 300 points in seven days in this normally most inert of markets. There is support at 1.4406 / 1.4385 and 1.4330 but only this morning we have dropped through some seemingly strong holding levels at 1.4448 and 1.4432. The world seems to have decided that the currency of preference is the euro at the moment (with the yen strong by defauly of so many positions being unwound), of course euro land has its own problems but these seem pale by comparison to the UK and US just at the moment.

As with all times of trouble the old tellow metal is in demand. There is nothing so comforting as sitting on a pile of gold when the s**t hits the fan. At 711.5-712.1 we are up 2 bucks this morning but seem to be having trouble moving above 714. Punters continue to be long (in greater and greater amounts) as the attractions increase. In the event of some slowdown in bad news we may find that speculative longs are rather big and so bulls should be wary of a swift fall out.

Oil is slipping from highs as fears of a slowdown caused by the financial sector continue to build. My talk of $100 a barrel seems to have had the effect I was hoping for and we have dropped 2 bucks. Novemebr brent is now at 75.76-75.81 and on the bottom of the trend channel that I have mentioned many times in the past few weeks. Our clients ran nice shorts off the top of the channel on Friday and are busy cutting positions this morning to take profits.

As we fast approach the Federal Reserve’s next meeting, scheduled for the 18th September, many investors are eagerly awaiting the next rate announcement so they can gauge the level of risk they wish to take going forward. It has been widely reported that investors expect a cut in the Federal Funds Rate, which drives the rates at which banks lend to each other, at the next meeting.

At BetsForTraders the market research group have been analysing the possibilities for the meeting and broken it down as follows:

Scenario A: the Fed leaves rates unchanged. Under this scenario, we would expect the equity markets to fall as many traders are long under the presumption that rates will be lowered and therefore liquidity in the credit markets will improve. A sell off in stocks is to be expected in this instance with bank stocks taking the brunt of the hit. Expect the more rate-sensitive banks on both sides of the Atlantic to react badly. The US Dollar will almost certainly strengthen as many traders have already sold out of it recently, pushing the higher yielding currencies down from their recent highs against the Greenback.

Scenario B: the Fed cuts the rate by 25 basis points. The equity markets will gain moderately as an increase in liquidity in the credit markets will be enjoyed by banks, much in line with expectation. As the Fed Fund Futures are already pricing in a 25 basis point cut for September, we would expect a short-term rally in equities as traders breathe a sigh of proverbial relief. The US Dollar may even gain some ground against the higher yielding currencies under this scenario as many traders are positioned to benefit from a full 50 basis point cut. Expect some moderate Dollar strength over the following days as these trades are unwound.

Scenario C: the Fed cuts rates by 50 basis points. The Fed Funds futures are currently pricing in a 50 basis point rate cut at around a 65% probability while the action on the foreign exchange book at BetsForTraders.com has the event implied at about a 71% probability according to our models. The jury is therefore very much out on this one and there is still room for equities to gain significant strength in the event that the full 50 bps is delivered. Liquidity in the credit markets should increase considerably under this scenario and we can expect the recently battered bank stocks to lead the way up in much the same way as we can expect the opposite effect in the event of an unchanged policy. The US Dollar will no doubt come under further pressure and we would expect to see the Dollar lose ground against all of the majors as the difference in currency yields widens. Some of the more aggressive traders at BetsForTraders.com who are expecting a 50 bp cut are now betting on Sterling / Dollar to make it as far as 2.070 in the next 10 days.

This commentary provides a fairly simplistic short-term view but it is a big decision for the Federal Reserve and the world will be watching to see how the Fed calls it. Whichever they elect to do will have substantial ramifications for the economy at this delicate time.

Taking a longer-term view, the Federal Funds Rate has long been used to control inflationary pressures in the US and has been a key driver in foreign exchange rates. To cut rates to buoy the world’s financial markets is a good short-term option but it could well come back to haunt the Fed. Lowering interest rates may cause a weak Dollar which would have obvious consequences for import prices. This in turn can be expected to adversely impact upon shelf prices for the US consumers, thus driving US inflation up. The added risk in the equation is that consumer interest rates will decrease. American households certainly don't need any more access to credit given the prevailing deficit.

So we await the next Federal Reserve meeting, a cut in the federal funds rate may be just what the markets ordered to restore a sense of calm in the short term after the recent frenetic trading. Looking to the not so distant future though, is it really the answer or is it a case of papering over the cracks? If a major bank announces they are in trouble with sub-prime mortgage lending, investors will be out of the markets like a shot. The real problem behind all this is debt and the fact that there is too much of it. Playing with interest rates may increase and decrease liquidity, but lowering them allows more borrowing and raising them causes more defaults on the payment of debt, so is lowering interest rates when debt is the root cause really the way out of this? Inevitably the markets will decide.

LONDON (Thomson Financial) - Spread betting company IG Group Holdings PLC said its year-on-year group revenue for the quarter to end-August rose more than 60 pct as it benefited from high levels of equity market volatility.

IG Group said revenue was in excess of 40 mln stg compared with about 25 mln stg in the corresponding quarter last year, adding that revenue from its financial business is 70 pct higher than the year-ago period.

The strong momentum seen at the end of the last financial year has continued into this year, it added.

The company said it has made a stronger-than-expected start to the financial year, due to the market volatility, and remains confident about its full-year prospects.

The reasons given for Barclays needing £1.6 bln from the BOE do not exactly stack up. Newspapers report that the failure of the Crest system was the reason and that Barclays did not have enough time in the afternoon to assess their overnight funding requirements. This sounds fine until you realise that the money was actually borrowed in the morning. Apparently the bank felt it was unable to cover its full lending book as early as 11 o'clock some 5 hours before the closing of the money markets. This is almost an unbelievable situation that a bank of Barclays standing cannot get enough funding from its fellow banks.

When you add this to the senior resignations a week or so ago you can understand why the stock is coming under pressure. A spokesman stating that even at distressed valuations the Bonds held by Barcap's various funds only give a £75m loss obviously does not know what a distressed level is. 95c in the dollar is just a lack of buyers...at the moment most of the investment banks etc are piling money into their various investment vehicles because they know that there is a vast difference between just a lack of buyers and a situation where we have forced sellers. If the funds were not stabalised they would have to sell into a market where nobody was willing to buy. In those situations perfectly reasonable debt can fall to 60c in the dollar. I know, I was the scandi debt trader for Union Bank of Finland in the early nineties. Nokia debt fell as low as Libor plus 9% as forced sellers from Japan hit any bid going (in current terminology that would mean borrowing at around 15% for corporates).

To date there has been no major forced liquidation of hedge fund risk because the central banks have stepped into the short term funding gap. But if the short term credit crunch continues for much longer somebody somewhere may finally pull the trigger. If that happens then there will truly be a financial crisis.

All this is a long way away this morning as markets look to be opening on the bounce after rumours of the Fed being requested by George Bush to ease rates percolates across the globe. The FTSE which had been trading to open 30 lower at the close last night is now looking to come in 30 higher at 6240-6241 as the market volatility continues to smash about. The Nikkei put on over 400 points overnight and the hang seng over 550. The surges in the far east will bolster investor's minds this morning and we will be talking to a lot of happy clients who went into the close generally on the long side.

The dow is trading up 120 at 13352-13356 but we must be watchful for a pull back at around 14.30 as the Americans tend not to like their market being pulled around out of hours.

On the reporting front Rightmove, the internet property portal reports good numbers and buyers are hovering to pick up stock on the open. The company must be just about the only unit involved in house building/sales etc that is sparking investor confidence. The stock rallied 13p yesterday and is likely to come in on the plus side again this morning.

FX markets are generally quiet as the Yen weakens once more. With the dollar slipping against the euro and pound but strengthening significantly vs the yen readers will be able to spot that the gbp/yen and eur/yen are shifting sharply higher. Sterling is now 700 pips from the lows yesterday at 234.68-234.76. We have been up here several times in the last week or so but each time has triggered heavy selling. If the cross can close here or higher this evening there is a good chance that technical buyers will be attracted. If we slip and close below 134.40 then the resistance will still be in place and the odds will favour another return to the downside.

Punters seem to be increasingly interested in Gold again and, as the turmoil unfolds around us, the yellow metal is being seen as something of a safe haven. Yesterday, in a tight trading range, we saw the support hold again in the low 660's but little unside lift either. Today the market is opening $3 higher at 667.4-668.0 and dealers are picking up a bit more on the open. Minor Resistance is now at around 669 with a bigger barrier at 675.

Oil is slowly climbing higher. As mentioned a couple of days ago the oil market seems to have got itself into a gently rising trend channel. We have support at 71.40 and 70.90 and resistance at 72.80. Punters are buying on the pull backs to the trend support and selling as we approach the top of the channel.

Execution-only broker TD Waterhouse has introduced a facility to make quarterly bets within its Financial Spread Betting service. The quarterly bets cover indices, equities, currencies and commodities on both UK and international markets.

The move is a response to the increasing number of investors who are using spread betting to hedge against risk in their portfolios. Angus Rigby, chief executive at TD Waterhouse UK, observes that ‘Although the majority of our spread betting volume tends to be speculators taking long positions, the use of spread bets as a hedging tool is growing. In recent weeks, as markets have fallen, we have seen a surge of activity in short positions on UK, US and European indices.’

He adds, ‘We have added quarterly bets in response to demand from longer-term investors, who tend to hold positions for weeks or months and therefore find quarterly bets easier and more cost effective than daily rolling bets.’

Quarterly bets have a fixed expiry date and, as the name suggests, they remain valid for a specific quarter. Investors have the option of allowing them to be settled for cash at expiry or closing them at any time before the set expiry date. But unlike daily rolling bets, quarterly bets do not incur overnight financing charges, as the financing costs of holding the position are included in the spread.

Rigby concludes that ‘For investors holding positions for weeks or months, quarterly bets are easier and more cost effective to use than daily rolling bets. And to help investors control their risk, the TD Waterhouse Financial Spread Betting service offers a Limited Risk Account, which automatically places a guaranteed stop-loss on every bet. For investors wanting to take greater risks, the Standard Account offers a choice of order types including limits, stop-losses and guaranteed stop-losses.’

In Europe yesterday the markets started the day up as expected, with most of the major indices posting gains in excess of 1% during morning trade. As the day wore on the markets slipped and although all the major indices finished the day up the gains experienced during the early morning were cut back in the afternoon trading session. In the US the major indices had a mixed day. After early gains were eroded and the indices dropped below the days opening levels a strong finishing rally helped the indices end the day up with the Dow up 42 points. Ryan Kneale, Market Analyst at BetsForTraders.com commented "The markets had a mixed day yesterday as traders weigh up last Fridays decision by the Fed. Whether it was a quick fix to the recent slide in global equities or a more permanent solution remains to be seen."

In the Foreign exchange markets a little risk appetite returned yesterday as traders sought the high yielding currencies once more. The result from this mini-resurgence in risk taking resulted in the Yen losing some of last weeks gains to all the major currencies.

Bet of the Day

With the recent turnaround in fortunes for the major stock indices BetsForTraders are offering odds of 4-1 on the German-30 Index continuing to rise and be above 7750 in 10 market days.

Not quite sure what to mention this morning as we seem to be actually rather quiet on the open (finally).

The FTSE is called 20 higher at 6098-6099 after the US moved into positive territory after Europe went home yesterday and the Far East went bananas for the second day in a row. The Hang Seng has now put on 1600 points in two days.

Whilst it is always nice to see the markets going up (for most punters) the reaction to the Fed 0.5% discount to the banks seems to be rather extreme. Nothing in the cupboard has changed over the past week so dealers may be forgiven for wondering what is so wonderful all of a sudden as they may also have been forgiven for wondering what all the fuss was about in the previous two weeks.

Punters are selling this morning as the recent bullishness seems not to hold much attraction for them. The UK markets remain (fundamentally) good value on profit forecasts, trading at around 12 for the FTSE 100 for this year and around 11.5 for next. This type of return would seem to be very attractive if corporates can maintain their margins and revenue streams but with sales in the US seemingly falling off a cliff fears for a recession are rampant.

Aside from crude oil inventories there is little information out today so fears rather than hopes are likely to be the main influence for the session.

Persimmon (like Michael Page yesterday) has reinforced the overall corporate riches scenario with stellar interims showing that the first 6 months gave fully 85% of expected full year profits. With house building still in a demand led phase with a supply led constriction it is unlikely that new home sales will be harmed in the short term. The stock remains on low p/e as investors continue to fear a housing slump (as they have done for the last four years!, me included).

On the FX markets the pound is falling once more after the short term boost given by the dollar rate easing. The effort yesterday in pushing markets up to the 1.99 level in cable seems to have proved too much to carry and with fears over the UK economy rising (now that the city may not be quite such a boom time crutch as in 2006) we can expect continuous shifts one way and the other in the coming months. Added to this is the spectre of a near term election. On the economy, forecasters are probably sitting in the Prime Minister office as I write, informing him that times are about to get tough, so the advice will be "go to the country as soon as you can if you want to be Prime Minister for longer than a year or so". Plus the fact that the conservatives have a completely useless opponent at the moment may not be the case in two years time. An election in the current environment will probably not go down well in financial markets as both parties compete on how generous they are going to be with other people’s money.

Yen markets are on the up again this morning and the betting is getting heavy from our clients on a further extension of the recent moves. gbp/jpy is not the most heavily traded of our markets but our punters seem keen to sell pounds at the moment and buy the land of the rising sun. For overnight charges this is an expensive play to make but the momentum is definitely against the pound at the moment. At 227.28-227.36 we are fully 800 pips from the recent lows which is the target for the bears.

Gold is pretty much exactly where it was this time yesterday as we hover underneath the resistance mentioned then of 659/660. Punters remain wary waiting to see if we can break higher into the 660 to 675 range again or whether the resistance will hold and we drift back into the 640 to 659 section. The current price is 657.0-657.6.

Hurricane Dean slips out of the news and so Oil meanders slowly lower. The storm season is proving (from an oil point of view) to be something of a damp squib at the moment as the major damage is caused southeast of the platform area. October Brent is at 69.57-69.62 off 30 cents or so. $69 seems to be something of a support level and if it is breached traders will once again be wondering if the mythical $100 a barrel will ever be reached.

Spread betting punters suffered one of their worst ever day's speculation this week after thousands of City traders and amateur investors placed aggressive bets that the stock market would recover on Thursday - a day the FTSE 100 index suffered its sharpest decline in more than four years.

Simon Denham, of Capital Spreads, said: "It was not quite our clients' worst ever day, but it was definitely veering towards it. This is slightly disappointing as, until yesterday, our clients had held their heads above water quite well in the current conditions." Will Armitage, senior quoting dealer at IG Index, confirmed heavy losses for punters "would have been industry-wide".

Heavy losses came as fearless traders rushed, in record numbers, to place bets on the volatile markets bouncing sharply from previous heavy losses - particularly in the FTSE index, mining and financial stocks. There were heavy bets also on foreign exchange rates.

A spread bet offers traders a wager on whether financial indicators - indices, share prices, exchange rates, etc - will rise or fall. Depending on whether the bet is correct, they can make open-ended gains or losses.

Andrew Garrood, joint managing director of Cantor Index, said volumes on Thursday had been 150% more than levels for an average trading day - an exceptional level of business for the middle of August. "They have been substantially higher than normal because volatility was substantially higher than normal. The two are always linked for us."

The 250-point, or 4.1%, decline in the FTSE 100 on Thursday was severe, but still far short of being a record decline in modern times. However, combined with the level of aggressive bets on a recovery, Thursday's fall was one of the most painful for spread betting speculators since the industry emerged in the UK in the late 1980s. One dealer said he had seen punters fix their losses from bets against declines in New York only to return with a bet against rises just as the Dow Jones Industrial Average began a dramatic late rally.

Writing in his widely circulated market commentary before the London market opened on Thursday, Mr Denham, of emerging firm Capital Spreads, said: "Wise traders would still be sitting on their hands unless there is a specific reason for being in the market. The present situation is as random as I have seen it for years and holding positions in virtually anything is a white-knuckle ride."

Yesterday, he said his comments appeared to fall on deaf ears. "[On Thursday morning, I] made the point that the current trading activities were not the sane ones for punters to be involved with. As a trading company I am happy to see that our clients completely ignored this piece of advice and managed to trade around 22,500 times in the 24-hour period, a quite spectacular record for Capital Spreads." The previous record was 16,000.

"I wish I could be happy with their overall performance, but sadly, given the volatility, this was not the case. Some punters made very good money but, in the main, most were caught in the headlights and run down."

The wider markets this week showed a rush of selling across almost all asset classes as investors looked for greater security. "Anyone who claims they know what is going on is lying," one senior fund manager said.

Nevertheless spread betting firms appear to have found no shortage of aggressive speculators with strong views, steely nerves and the necessary cash to place high-risk bets. As the London markets closed last night, spread betting trading volumes in the capital again appeared to be heading towards record peaks.

It just wasn’t cricket. Or at least, spread betting firm Sporting Index didn’t think so, less than a month after it launched its dedicated Irish website.

The site went live in time for the Cheltenham racing festival in March, but it was the Irish cricket team’s World Cup success and not the horses that helped one punter to burn the company.

A trader working in Dublin’s International Financial Services Centre bought Ireland’s total runs in the tournament at an opening spread of 585 at EUR10-a-run, meaning he was paid EUR10 for every run above that number.

By the end of the month, the spread had risen to 1,450, difference of 865, leaving him sitting on a tax-free profit of EUR8,650, thanks to Jeremy Bray and his team-mates.

The lucky, or shrewd, punter believed that the team would score more runs than 585. However, if he had decided that Ireland would not reach that number of runs, he could have sold at 580 for EUR10. As the difference was 870 at the point when the spread rose to 1,450, he would have lost EUR8,700 at that point.

Ian O’Sullivan, who manages Sporting Index’ Irish business, says so far, the punters are getting the upper hand (not a situation that ever lasts too long). The company has targeted hunting and football in a particular way, precisely because the goals and points scoring system makes them ideal for spread betting.

On the hurling and football fields, one customer landed EUR1,900 for a modest stake on a first round Leinster football clash. He then fought the number of goals in the Cork Waterford Munster hurling semi-final clash at 2.4 for EUR800. If there had been no goals, he would have lost EUR1,800, just one goal and he would have lost EUR1,000.

In the end, there were eight goals, leaving him with EUR44,800, or 800 times 5.6 (the difference between 8 and 2.4) in profits. It’s not all been one way though.

One customer fancied Kildare in the team’s All-Ireland Football qualifier clash with Louth two weekends ago, and bought the Lily Whites to win at 2.5 for EUR400. This means he believed Kildare would beat Louth by more than 2.5 points (Sporting Index uses decimals on some of its spreads, even though there is no such thing as 0.5 of a point).

In the end, Kildare lost by six points. The punter lost EUR3,400, 8.5 times the stake – that is 2.5 plus Louth’s winning margin of six points.

Spread Betting is gaining ground in Ireland to the point where one well-known Irish sports betting operation, Paddy Power has branched into it, although it is only offering the product on the financial markets.

LONDON (Thomson Financial) - London Capital Group Holdings PLC (operating Capital Spreads) said its first-half pretax profit more than doubled with its main brands performing above expectations and that it has started the second half of the year well.

The spread-betting company said first-half pretax profit rose to 3.57 mln stg from 1.66 mln stg a year earlier, as sales surged to 8.13 mln stg from 3.53 mln stg. Excluding share option reserve, pretax profit rose to 3.90 mln stg from 1.65 mln stg.

The average number of spread bets taken per day increased 63 pct to 7,030 and the number of live spread betting client accounts increased 96 pct to 13,180.

London Capital set an interim dividend of 1.25 pence per share and said it continues to perform in line with expectations.

Another ridiculous trading day with the post Fed announcement causing all sorts of craziness.

The dow managed a truly awesome performance. In the two hours after the Fed release the dow fell 170 points then rallied 260 points before dropping back 100 points to close pretty much at the same trading level as prior to the data. There will have been a great number of burnt fingers and fortunes made in the process.

Our clients were quite flat in the American markets coming into the figure and subsequently had a rip roaring evening buying into the initial drop then selling into the subsequent rally (sometimes you can just pick up money from the street). As can be seen from capital spreads' daily charts the ranges for the last 10 trading days have been awesome with almost the feeling that we are back in 2000/2002.

The FTSE is continuing with the fun this morning and is called some 35 higher at 6345-6346 and our punters seem to be continuing with the recently successful ploy of selling or buying against any directional move. Sellers this morning are outweighing buyers by a considerable margin and the hope will be for the market to reverse again and give the players another payday.

Yesterday gave us another 100 point plus move day (this time to the upside) as the volatility continues to whittle down incautious traders. In times like these it is wise to batten down the hatches and reduce trading sizes. You can make or lose equivalent amounts with much smaller punts.

ITV is expected to show a slowing in the rate of audience loss but with the plethora of new channels opening up it is going to be a long expensive way back. Growth potential is limited (there are only so many hours in a day that people will watch the goggle box) and the slice of the pie has ever more contenders, not least the government funded old enemy the BBC. The shares have been rallying recently in anticipation of better data but this cannot hide the fact that the stock has not moved in four years and is at the bottom end of the trading range. All media stocks have been under pressure as the power of the internet takes hold and this does not look like changing just yet.

Sun Alliance is likely to mention the recent floods in today’s numbers but in reality the new business created by the disasters will probably heavily outweigh the temporary losses. I cannot imagine many people across the UK who will not be taking out house insurance next year after this!

Sterling has broken out of the trading range mentioned yesterday and readers of this comment shout be sitting pretty. The support at around 2.0205 was breached briefly yesterday but sellers would have been able to get out at minimal cost. This morning the break looks more substantial and sell orders have been triggered all the way down to 2.0190 in early trade as clients get in on the move. The first support is at 2.0150 and then below here 2.0075. On the plus side if the market fails to make the move stick there is a lot of free movement potential to the upside with 2.0275 the first obvious target and then 2.0340. The current price at 2.0170-2.0173 is not enough to confirm the break (we need to print below 2.0150) but the pressure seems now to be dollar favorable for the time being as commentators struggle to understand future US intentions.

The Yen continues to play around the 118 to 119 region as mentioned in previous comment with yesterday’s sharp move down to 118.00 on the fed numbers quickly reversed and now we are around the top of the trading range at 119.10-119.12. Punters are beginning to sell the dollar yen again this morning having made hay in yesterdays mess.

Overnight the aussies have raised rates to a 10 year high at 6.5% (and we thought 5.75 was bad here). The currency has not responded particularly strongly not surprisingly given the recent set back from the highs of 0.8870. The currency has rallied some 60% vs the dollar since 2003 and god knows how much against the yen in the same period. As the economy is to a certain extent driven by commodity exports the rally in metals can have come as no small benefit but the currency with the recent weakness in mind looks vulnerable to further falls. The current price is 0.8574-0.8576.

On the dollar strength yesterday gold made a break for the downside but was unable to hold below 669. Traders continue to buy the yellow metal on any weakness and unless we see a solid break and close lower who can blame them. On the other hand it seems to be getting harder and harder to make progress through the 675 resistance as pressure from above seems to continue.

Oil recovered some of its lost ground from Monday but traders remain nervous of a resumption of the dramatic falls. Clients are slightly short this morning and seem content to stay on the downside. The market is opening about 35 cents lower today at 71.44-71.49 in the September Brent. The market is very whippy and as I have mentioned many times over the past few months/years not an arena for the faint hearted!

Cantor Fitzgerald said yesterday it was effectively doubling the amount of money that must be held on deposit when trading FTSE 100 stocks via spread betting or contracts for difference.

The company blamed the current turmoil in global credit markets and volatility in the world's stock markets. Credit markets were thrown into chaos by the sub-prime mortgage crisis in the US, with the contagion spreading throughout debt markets.

The problems have had a knock-on effect on the world's stock markets, and a number of flotations have been cancelled.

Spread betting is a leveraged product, meaning punters only have to put down a percentage of the amount they want to trade. That has been increased from 10 to 20 per cent. The move also applies to contracts for difference, another derivative that enables investors to benefit from rises or falls in the price of relatively large packages shares for significantly less than their cost.

The company said: "In light of the current global credit market and the volatility in the global equity markets, Cantor Fitzgerald has raised margin rates applied to its CFD and spread betting products by 10 per cent. The management believe that the company should be prudent and vigilant in its approach to credit and the credit facilities it offers. The change is expected to be temporary and rates will return to usual levels when the current volatility subsides."

Other spread betting companies said they did not plan to follow suit. John Noble, dealing director at IG, said: "We monitor changes in volatility in stocks and if things go outside our limits, that is when we would act. At the moment we are comfortable." City Index took a similar stance.

One of the interesting declarations stemming from the recent AIM listing of spread betting company Worldspreads was reported by the Irish publication Sunday Business Post over the weekend.

Worldspreads is currently in litigation to recover over Euro 1 million from 2 debtors, the report reveals.

The firm has taken High Court proceedings against one debtor who owes the company Euro 550 000, while a second individual owes WorldSpreads Euro 519 000).

The figures are significant, given that WorldSpreads made a profit of Euro 530 000 on revenue of Euro 6.6 million last year.

Details of the company’s litigation are included in its AIM admission document. The Irish litigation dates to October 2005,when the firm started High Court proceedings after a ‘‘debtor’s account became indebted for approximately Euro 550 000. This matter is ongoing, notice of trial has been served and counsel must now certify the matter ready to proceed to trial,” according to the document.

The second case started in March this year. 'A claim was issued against a customer of the group in the High Court in England to recover Euro 519 000 owed by the customer to the group pursuant to unsuccessful spread-betting transactions. No defense was filed by the defendant and an application for judgment in default was duly made and granted by the High Court on 21st May 2007.'

Happy days are here again...goes the refrain.

Yet again the markets are all over the place with the US markets putting on the ritz last night and managing a 100 point rally out of nothing we are calling the FTSE 25 points up at 6324-6325. Bulls will be looking for a retest of the 6370 level where we failed on Tuesday and bears will be hoping for a bad non farm payroll number this afternoon to help the markets on the way down again.

Aside from the sub prime debt problems the world economy is doing well and the reporting season (with a few high profile exceptions) has so far been very much on the plus side. The FTSE is trading in the 12 times p/e range which by most historical standards would be considered to be cheap but investors are feeling just a bit shy just at the moment not wanting to be burned on some sudden deterioration in news flow.

Punters are actually short the FTSE long just about everything else this morning which on an outright book exposure leaves Capital Spreads with little indication as to how traders are feeling. The fact that we are still well off the highs but punters are selling in the UK markets shows that in the main they are fearful that UK plc is not the place to be just at the moment and the liquidation of long held positions in single stocks has continued into the back end of this week.

The Dax managed to rally over 50 points in just a few minutes last night as the US rally caught day traders unawares and memories of the last half hour on Wednesday were still fresh.

RBS have reported stellar numbers and a 25% lift in dividend (punchy by any standards), the divvy yield is now putting the stock at almost a must have addition to many portfolios. Stock is expected to open 10 to 15p up this morning.

Tompkins have also come in with much better figures than forecast. Woes in the US housing sector and in automotive parts business combined with the continued weakness in the greenback have meant tough times but the company appears to be weathering the storm very nicely indeed.

FX markets (as with the FTSE) are being quite subdued at the moment as (finally) the summer seems to have arrived. With the sun shining and all the floods disappearing we may see a slowdown in trading volumes as punters find other things to do.

Cable spent much of yesterday in the trading ranges mentioned in our newsletter before breaking above the 2.0330 resistance mentioned and moving up to the current levels. The trading range since the break out has been a miserly 25 pips between 2.0350 and 2.0375. The current price of 2.0357-2.0360 is bang in the middle of this and dealers will be looking to trade the range until a confirmed breach and then get on the back of any move.

Sterling Yen has rallied up to resistance at 242.90 but at the moment seems shy of breaking through. Dealers are buying the pound but really need a confirmation of a resumption of the yen weakness before further cross strength can be expected. A break above 243.00 will get more punters coming in on the buy side but until then most may consider sitting on their hands. The Euro is also trying to recover some lost ground against the yen but the going is looking tougher and tougher. A turn round could be quite bloody. There is strong resistance above us between 163.50 and 163.90 and at the current price of 163.31-163.34 dealers will be nervous about being the ones to be pushing the envelope. On the downside there is good support at 163.00, heavy volume support in the mid to low 162's and then lower at 161.45 to 161.65.

Gold (yawn) seems to be pondering its next move with punters getting long once more. The support at 659/660 seems to be holding nicely which has tempted the buyers in once more. Dealers will be watching for signs of weakness but the feeling seems to be "we have seen these falls before and they have all been good buying opportunities, so why not this time as well". At 665.5-666.1 we are unchanged from last night and seemingly happy and comfortable.

Oil did yet another impression of 'whores draws', up down up down etc etc.... The September contract hit the same lows as on the 25th July and then bounced violently. There seems to be little rhyme or reason to market activity at the moment 100 cent moves seemingly placed at random throughout the day.

WorldSpreads, the London and Dublin-based spread betting firm, has debuted on AIM, having raised £5.77m of new money at 47p a share. The company, which pioneered spread betting on the Emerald Isle and sports ex-Manchester United defender Kevin Moran as a non-executive, will use AIM to raise its profile and lure new clients in a fast-growing sector.

Chief executive Conor Foley says AIM will help WorldSpreads grow into a ‘substantial’ spread betting business, with placing proceeds assisting with debt repayment and marketing efforts as well as helping the group meet relevant FSA capital adequacy requirements. Initially focused on sports spread betting in Ireland and the UK, the business branched out into financial markets in 2002 and, in 2005, began to provide financial spread betting products online. More recently, FSA approval was won for a move into foreign exchange products as well as futures and options.

Though the bulk of its (pre-approved and vetted) clients are based in the UK and Ireland, international expansion is underway via joint ventures and revenue share deals in Spain, Hungary, and South Africa.

The business is on a growth tear, having grown client numbers from 327 at the end of March 2006 to almost 2,000 as of March this year and the WorldSpreads UK business having executed almost 2,000 bets a day during March, up from an average 91 bets a year earlier. For the year to March ’07, an operating profit of €530,000 (£357,000) was scored on €6.58m (£4.4m) sales. Given the share price success of peer London Capital Group, WorldSpreads should receive a warm reception from here on in.

Financial services group Purple Capital has bought CFD and spread betting provider Global Trader for EUR36m, or R346m. Global Trader is a dominant player in the South African market, and also has operations in Europe North America, Asia, the UK and Thailand.

CFDs and spread trading are ways of taking bets on various stock market price movements. The products have become popular in South Africa, and a number of players have entered the retail market including Dealstream, Nedbank and Ideal CFDs.

Purple Capital says that Global Trader is a high growth business with a relatively mature, highly profitable and cash generating business in South Africa and established, regulated operations in a number of jurisdictions and geographies internationally.

"One of the biggest challenges for South African companies is to spread offshore," says Purple CEO Mark Barnes.

Barnes declined to give a price:earnings multiple for Global Trader, but said he bought the business on a price:EBITDA multiple of ten times. However, he says the company is trading very well this year, and that the forward multiple is "significantly lower".

He also notes that Global Trader has spent a lot of money obtaining regulatory approval in various offshore jurisdictions. It has yet to reap the full benefit of these investments, he reckons, with some overseas operations only starting to break even.

Global Trader was founded in Europe in 2000 and conducts in excess of a million transactions per year, worth over $10bn per year, for clients in 29 countries.

The purchase price will be settled by an issue of 88,6m shares for cash at a price of R1,80 per share. Purple Capital says it has received irrevocable undertakings to subscribe for the shares. "The balance will be funded out of current cash resources and funding facilities available to Purple Capital," the company said in a statement to the JSE. Barnes said the money has been borrowed from major South African institutions.

Well what can I say.

What a difference just 12 hours make!

Markets closed 150 points higher yesterday and are OPENING 150 points lower this morning.

Bear Stearns and Macquarie Bank give really quite unnerving statements concerning redemption and profitability and this has really set the cat amongst the pigeons. With the Nikkei off 400 points overnight and the Dow (which had been 150 up at one stage closing 150 down the outlook is very grim for any 'bottom pickers' out there. As I mentioned (was it just yesterday) the market looked good for the buyers but the problems had not gone away.

Yet again our punters have made a great play with the buyers in the FTSE yesterday taking profits near to the highs and then going heavily short. The rally of 150 points looked a bit of overkill and this morning seems to be confirming it.

In times of trouble traders still gravitate to the dollar and this will be the reason for the buying recently in the greenback which has seen it pulling back from the worst levels of last week and we can expect more dollar strength (especially with rates at 5.25%) if the financial turmoil goes on. The same could be said for the Swiss and yen to certain extent.

The early call on the FTSE is at 6212-6213 (ouch) and we can expect a great deal of blood on the streets in the banking and retail sectors of the index. With such heavy weighting in mining and oil though the FTSE should do better than the other indices as there is still no feeling that the financial contagion will seep into the main economy. At some point in this fall out there will be a buying opportunity (as we saw on Monday and Tuesday) but at the moment it is time for tin hats and deep trenches. The Dax in early futures trading has already hit (exactly) the same lows as the three attempts last week and on Monday at 7365 and is now bouncing slightly to 7401-7403 as buyers again come in at that level.

In the FX markets as mentioned dealers are looking to unwind open positions and buy back their dollar shorts as there are no prizes for being the wrong way round in these markets. Treasury managers across the world will be making sure that their trading rooms are as flat as possible until the chaos dies down. Cable having hit 2.0375 yesterday is back at support at 2.0236-2.0239 having hit the low extension at 2.0205 in early morning action. A break below 2.0200 may be leapt on by the chartists so dealers will have to be aware that some stops and new orders are likely to be in place around this level.

Gold which many would feel is a good place to be in times of woe is suffering as well as the dollar rallies and is now off 7 bucks on the open. Support remains solid at 660 but we are right there at the moment so punters will be nervous here as well of a push through to lower levels. The bears will be hunting down a break and are probably targeting the lows of last month at around the 640 level.

One of the triggers for the dow slump was the renewed surge in oil as Nymex hit new all time highs last night dragging the Brent price 1.30 cents higher to 77.05-77.10. Readers of this comment will be pleased to note that the support mentioned at 75.50 held nicely and gave the platform for the bounce. This morning sees even oil slightly lower at 76.66-76.71 for September Brent with profit taking now the name of the game for our clients.

Online broker E*TRADE has reported a 42 per cent increase in some types of derivatives trading among UK investors.

Derivatives such as contracts for difference (CFDs), futures and spreadbetting are growing in popularity among private investors based in the UK, according to E*Trade. It saw a 23 per cent rise in CFD usage over the past year. Futures trading and spreadbetting have become even more popular since quarter two of 2006, with a 42 per cent rise in each type.

Salim Sebbata, senior director of UK Retail at E*TRADE, said, ‘Derivatives are increasingly becoming a popular way of trading commodities, currencies and stock indices.’

He attributed the increased activity to a number of factors, including the direction of the US market, the softening of the UK housing market, and rising interest rates. Such issues contribute to potential volatility and so encourage investors to hedge, according to Sebbata.

Past Spread Betting News