With the start of 2012 being broadly more optimistic than the end of 2011, it appears that the spread betting clients have benefited from the downturn in market volatility. With the old adage of “you can have too much of a good thing” looking true. Of course all spread bettors like to see market movements in whatever sector they trade but the wild swings we saw in the prices of equities, currencies and commodities meant that trying to gain any sense of real direction was difficult at best.
In January so far, clients have benefited from the upturn in precious metals and, along with the ever popular gold trading, we have noted that an increasing number of clients are also trading silver which has had an even more impressive rally since the turn of the year.
Individual equities have has also been an area where WorldSpreads clients have been able to make profits. WorldSpreads are one of the few spread betting providers to offer their clients trading on UK Sector ‘baskets’ and these are becoming increasingly popular.
This month, clients have profited on the Banking and Tobacco sectors. Trading in Crude Oil is also becoming more popular; we have one of the tightest spreads in the market and also offer a contract which does not expire. Interestingly, clients have profited on US Crude and have relatively equal losses on UK (Brent) crude, perhaps indicating that they are trading the differential.
Looking ahead to the year we anticipate several events that will shape the global investor sentiment and hopefully offer trading opportunities. In Europe we have the on-going complications of the European Sovereign debt situation and Greece once again needing the assistance of not just European but IMF bailout funds by March. We also have Nicholas Sarkozy trying to regain power in the French elections in April. Added to this the rating agencies have shown that they are willing to cut those nations they feel are not making sufficient progress in tackling their GDP debt ratios. When we look across the Atlantic later this year we will have US elections and historically this has proven to be beneficial to the US markets. All of these events will go some way to shaping the year we have.
With these changes in mind, WorldSpreads have decided to shake up those products that we offer on Zero Spreads. The core products that prove to be so popular with our clients last year are very similar but we have decided to expand the offer from 10 to 12 giving an even broader range of trades that our Platinum Account holders can trade with NO spread. Added to the mix are the S&P 500 (US SPX 500), Vodafone and RBS.
If you’re new to financial spread betting and are looking for a guide, or just the benefit of someone else’s experience, we have asked Rez Shah to give his thoughts from a beginner’s perspective. Getting started in spread betting can be daunting but we hope to help you along the way.
If we learned one lesson from last year it is that making predictions at the beginning of the year is a difficult one. So, rather than set myself up for a fall, I’ll give you my events to watch out for in the first quarter of 2012.
The start of the year has been a very positive one following on from some unexpectedly positive economic news flow from China. The Asian markets closed the first day in the green and the European markets (whose economies are, to a greater or lesser extent, driven by the consumer demand in Asia) followed suit with the FTSE future being called up 100 points 30 minutes before the open.
2012 is an election year in America and historically these have tended to have a positive knock on to the US economy and US equity markets. In the last 6 months of 2011 the US$ strengthened from its May lows but still has some way to go before challenging its 2010 June high. The last two quarters have seen large numbers of US equities beating analysts’ estimates and report slightly more positive figures.
So have the world’s economies turned a new page and are we set for a more positive year ahead? In order for this to be the case we would want to avoid several scenarios.
France maintaining its AAA sovereign debt rating will be an important issue. If it were to lose this, the next area to suffer would be the European banks (and especially the French ones) as many have sizable exposure to French government bonds. This will not be easy as France will undoubtedly have to make some difficult and unpopular decisions and historically French nationals have been swift to protest decisions they feel are unfair.
European Sovereign bond yields spent most of the last 6 months of 2011 being range bound and moving more like an equity than a bond. In order for stability to creep back into the equity markets we would want to see EFSF tackle the Sovereign bond markets, thus ensuring we don’t see any more European countries 10 year debt yields move up to or beyond the 7% level.
The first quarterly figures we see from the top tier European and US equities will be an interesting barometer for the year ahead. With so many companies having posted better than expected figures last year, it would not be surprising if analysts set the bar that little bit higher this year and companies can only cut costs so far and re-focus sales to such an extent before they can go any further. It is consumer demand and the health of the western world’s economies that will ultimately drive sales figures and profitability.
I want to start the year on a positive note but the memories of last year are still too fresh in the mind to get carried away.
Spread betting with WorldSpreads.
Alastair McCaig, talks about BP Plc’s litigation against Halliburton Co., its cement contractor for the Macondo well project whose blowout set off the 2010 Gulf of Mexico oil spill. Speaking with Mark Barton on Bloomberg Television’s “Countdown”, McCaig also discusses the outlook for stocks in 2012.
Alastair McCaig talks about the UniCredit rights issue
By Alastair McCaig | January 6, 2012
Alastair talks about the UniCredit rights issue, which aimed to raise €7.5 bn. Despite the offer to existing shareholders, the shares fell, intraday, by over 10%. View the full video below [2m15s].