FTSE 100 opens with gains of 1.5% but choppy trading likely
City Index August 11, 2011 3:20 PM
<p>The FTSE 100 opened with gains 1.5% on Thursday, helped by gains in the three heavyweight sectors: the miners, oil and banks. However, trading was likely to […]</p>
The FTSE 100 opened with gains 1.5% on Thursday, helped by gains in the three heavyweight sectors: the miners, oil and banks. However, trading was likely to remain choppy for European stocks and indices remained liable for large price swings in the run up to the start of trading in the US.
The FTSE 350 mining, oil and banking sectors all traded higher broadly by 2%, contributing the most to the FTSE’s positive start today. ICAPshares traded close to the top of the FTSE gainers list, with shares rallying over 4% and traders backing on the trading house doing well from the recent upsurge in market volatility.
Point of indecision?
Stock markets are at a point of indecision of late, which is why we are seeing trading becoming particularly choppy, with large price swings to both the upside and downside. On the one hand I get the sense that traders want to buy into stocks on speculation that they have become oversold and may therefore see higher prices. On the other hand however is the fact that traders remain highly sensitive to news and rumours, as proved by yesterday’s heavy falls in Europe on the back of somewhat sketchy concerns over France and its banks. As long as this indecision continues, stocks are likely to remain bouncing quite violently like a cork in a bath.
Societe Generale’s shares stabilised on Thursday, having suffered falls of some 15% the previous day to trade higher by 7%. Shareholders and the market have calmed somewhat from reassurance from Soc Gen’sCEO Frederic Oudea, who dismissed the rumours of liquidity issues as “absolute rubbish.”
There will continue to be a large focus towards macroeconomic data today with investors using any clues to gauge the pace of the expected slowdown in global growth. As such data out from the US in the form of International Trade and jobless claims could influence how trading pans out in the afternoon.
Gold hits $1813.79
Whilst stocks remain at the point of indecision, investors continue to hedge themselves by buying into gold, which subsequently hit a new record high of $1813.79 today. The potential for the precious metal to hit $2000 sooner than later remains a sincere possibility should the global market fallout continue along its current path. That said, should stocks start to see a rally gain momentum and strength, investors could be quick to recycle their funds out of gold and back into stocks, which could create some big price swings in the metal.
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