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Financial Spread Betting & CFD Trading: FTSE rallied 1% on strength in commodity shares

01-19-2011 01:28 PM CET | Business, Economy, Finances, Banking & Insurance

Press release from: City Index

Spread betting provider City Index

Spread betting provider City Index

Joshua Raymond is a spread betting expert and Market Strategist at City Index (http://www.cityindex.co.uk/). Here, he looks at the financial activity shaping trading on 18th January, including strong buyer demand for shares of commodities companies pushing the FTSE higher.

“Strong buyer demand for shares of commodity companies such as energy and mining firms, aligned with hopes for an outperforming earnings season helped to power the FTSE higher by over 1%, with the UK Index settling around the 6050 level.

Indices across Europe saw similar gains with the DAX, CAC and IBEX all posting strong gains of between 0.7% and 2.7%.

Today’s gains are as much about investors bargain hunting stocks in the UK that had suffered three days of falls as investors becoming more optimistic about company earnings. We have had Burberry report excellent earnings along with positive report from Rio Tinto whilst business sentiment in Germany leaped far beyond market expectations. In short, it’s been a good news day and investors have lapped it up by buying into risky asset classes such as mining and energy firms. It will be very interesting to see whether Apple and IBM, who report later tonight also cheer the market. We still have the key banks in Europe to report yet and so there is likely to be more volatility to come from this earnings season.

The miners and energy firms have been the energy, excuse the pun, behind much of the gains today with both sectors rallying around 1.5% on the day. As these two sectors are key heavyweights on the FTSE 100, this is where we can locate much of the drive behind today’s rally in Indices.

Burberry delighted the market by reporting 27% rise in third quarter revenue, above market consensus, triggering an upgrade in stance from Numis Securities. The broker advised its clients that Burberry’s high quality growth more than supports its upgraded rating of ‘add’ from ‘hold’ and expects the retailer to deliver 20% EPS growth over the next few years.

Rio Tinto, the heavyweight miner, also pleased investors today by reporting iron ore production at record levels for the fourth quarter. This will undoubtedly please shareholders that the firm is doing all it can to cash in on high commodity prices whilst demand remains strong from emerging economies such as China. We have also seen market speculators buy into shares of Rio rival BHP Billiton today on expectations that they will report similarly good production volumes on Thursday.

Whilst investors continue to maintain an eye on proceedings amongst EU’s finance ministers, it appears investors are beginning to digest the potential for there being no top up to the ESFS with greater ease today.”

Plan ahead with live charting on your phone. City Index’s mobile trading app is now available on iPhone, Blackberry, Android and Java. Find out more at http://www.cityindex.co.uk/trading-platform/.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange,
CFD trading (http://www.cityindex.co.uk/cfd-trading/) and, in the UK, spread betting (http://www.cityindex.co.uk/spread-betting/).

We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers spread bet using innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support.

Contracts for differences (“CFD”) trading and financial spread betting carry a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary. For more information, visit http://www.cityindex.co.uk/.

City Index, Park House, 16 Finsbury Circus, London EC2M 7EB

Alex Nekrassov / Jonny Smith
New Century Media
020 7930 8033

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