The Week Just Gone in Spread betting

It was another painful week for equity markets- the FTSE was down 1.5% on the week as Friday saw stocks slide and reverse a two day rally. The index was again hurt by US data (GDP data released on Friday revealed an annualised 6.2% contraction in the US economy, the weakest reading since the first quarter of 1982) and more concerns over banks. Although London has not yet broken its November lows, unlike other US and European indices. The leading Industry Sectors were Auto mobile and Real Estate up 11.4% and 9% respectively.

FTSE Rolling Future- 23rd to 27th February

US stocks plummeted on Friday- the S&P cracked the significant 740 level and pushed stocks to a low not seen since 1997- ending the week at 735.09, a drop of 4.5%. The Dow was down another 300 points last week closing Friday at 7062.93, losing 4.1% for the week and posting its worst February since 1933, down 11.7%. The NASDAQ finished at 1377.84, a loss of 4.4% on the week.

In the currency markets, the yen fell more than 5% and hit a three month low against the dollar. Over the week, the dollar rose 1.1% to $1.2701 against the euro, and 1.1% to $1.4279 against the pound.

Long term government bond yields rose for much of the week, the yield on 10 year UK Gilts rose 20 basis points to 3.61%. Bunds were up 10 basis points on the week to 3.11%.

Oil prices were volatile this week, after hitting a low of $37.65 on Tuesday they then rallied above $44 on Friday. April WTI gained 9.2% this week and April Brent was up 7.8%, ending the week at $45.15, helped by speculation that OPEC would cut production further and by signs of a recovery in US petrol demand.

Gold was this week unable to maintain the momentum of the previous week which carried it above the $1000 an ounce level on Friday 20th. It came close on Monday but by Thursday Gold retreated to $932 an ounce, it saw a brief rally as shares fell on Friday and ended the week at around $940.

Ben Bernanke last week told Congress that the US economy is experiencing a “severe contraction” and that 2010 will be a “year of recovery” if the actions taken by the government manage to stabilise financial markets. There was great emphasis placed on the determination of policy makers not to overtly nationalise banks, Citigroup’s shares fell again this week, as details of a government plan to take a 36% stake in the bank emerged Citigroup saw 39% of its share price wiped out, finishing the week at $1.50.

On Tuesday, RBS announced the largest loss in UK corporate history. The government announced its asset protection scheme which will insure more than £500bn of bank’s toxic debt.

On Friday evening, HSBC was finalising plans to raise £12bn through a share issue which hopes to boost its capital in order to cope with the global economic downturn.

The Week Ahead:

Investors will be looking for further action from the government this week, in its campaign to shore up the financial system. The Federal Reserve is due to release details early next week on its latest plans, a massive program to support consumer and small business lending. Most data due out is expected to show the recession-hit economy is worsening. Among the reports, non-farm payrolls for February will shed light on the labor market, with analysts expecting unemployment to reach 7.9 percent. The Bank of England is this week expected to cut interest rates from one percent to 0.5 percent.

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