Stock indices recover from early losses; Italian bond auction eyed

<p>Stock indices recovered from sharp opening falls to trade lower between 0.1% and 0.8% on Thursday, with traders continuing to cast an eye on Capitol […]</p>

Stock indices recovered from sharp opening falls to trade lower between 0.1% and 0.8% on Thursday, with traders continuing to cast an eye on Capitol Hill. As another sign of market confidence in Italian debt, they auctioned off three- and 10-year bonds.

It’s the Italian bond auction that’s attracting immediate gaze this morning, and it is another opportunity for traders to gauge how much confidence the market has in Italian debt. There is every likelihood that demand will be high for the bonds themselves, though the premium being paid is also likely to be relatively high, confirming the escalation in investors’ concerns regarding Italy being dragged into the sovereign debt crisis.

The FTSE 100 opened lower by 1%, before finding support near the 5800 level where the UK Index made a recovery to trade back towards flat territory after the first hour of trading. Much of this recovery was led by higher buyer demand in UK banks such as Barclays, RBS and Lloyds. THE FTSE 350 banking sector recovered from earlier losses on the session of 0.8% to trade higher by 0.6% by 9am (London time).

Shares in Credit Suisse fell over 1% after the Swiss bank reported a poor second quarter performance in fixed income trading. Net profits fell well below analyst expectations of 1 billion Swiss Francs, coming in at CHF768 million, with revenues from fixed income sales down by a very poor 76%, worse than some of the bank’s international peers.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (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.

For further details see our full non-independent research disclaimer and quarterly summary.