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.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.