Greater London, England -- (SBWIRE) -- 01/18/2011 -- Joshua Raymond is Market Strategist at financial spread betting provider City Index (http://www.cityindex.co.uk/). Here, he takes a look at the EU markets on 13th January, as the FTSE falls and the Spanish and Italian indices rise.
“The FTSE 100 fell back on Thursday weighed down by weakness in mining firms but stock markets across wider Europe enjoyed another strong day with the Spanish Ibex and Italian Mib posting gains of 2.6% and 0.7% respectively as sovereign debt fears continue to wane with successful Spanish and Italian bond sales.
The successful Spanish and Italian bond sales, particularly when aligned with that of Portugal’s successful sale yesterday, are being seen as a vote of confidence in the ability of those nations to meet their debt requirements and importantly it plays into the EU’s hands a bit as it lessens the need for quick and potentially rash action. The bond sales and overall heightened optimism of increased liquidity in rescue funds for indebted nations with the eurozone has had a hugely positive effect on the Spanish Ibex and Italian Mib Indices this week, which have both now rallied 10% and 6% respectively in the last three days trading.
This renewed confidence in the region has given a good lift in buyer demand for euros, which has rallied against the US dollar from $1.29 to over $1.33 in the last few days.
Decisions by both the Bank of England and European Central Bank to hold interest rates at 0.5% and 1% respectively was met with a muted stock market reaction as both decisions were widely anticipated. The FTSE 100 suffered losses of 0.5% as weakness in mining stocks weighed on the UK Index. A bigger-than-expected jump in US jobless claims also helped to lock in the day's losses.
The 6050 continues to put a ceiling on the FTSE’s charge higher recently and this has stayed true for today’s session. Tonight we see Intel, the tech bellwether, announce their fourth quarter earnings and should they outperform expectations, this could certainly give the markets a strong start tomorrow. However traders may hold fire until Friday lunchtime when JP Morgan report their earnings. Should these two firms deliver a strong set of results, it could give the market enough buying power to lift the FTSE 100 beyond 6050 and towards two and a half year highs of 6090.
Tesco shares fall 4% after results
We have seen strong selling in Tesco’s shares after the UK’s supermarket leader missed analyst forecasts by reporting a 0.6% rise in underlying sales. Tesco’s is the third largest retailer in the world and many look to them as a bellwether of UK retail sector with one pound in seven being spent by consumers in their stores. Today’s earnings unfortunately did not tow some of the more outperforming themes to that of some of their peers such as Sainsbury’s and Morrison’s, and this has left a rather sour taste in investors’ mouths.”
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