London, England -- (SBWire) -- 03/18/2011 -- Joshua Raymond of City Index (http://www.cityindex.co.uk/) gives a daily report on the financial markets to looks at where the spread betting and CFD trading markets might turn next. See his review for 10th March here.
“The FTSE 100 traded lower by over 1.5% today, hitting a new five-week low to near crucial support levels and threatening a market correction in the process should the UK Index close below 5824.
What we have had today has been a catalyst of negative sentiment all combined together to force traders away from risky asset classes. The day did not start well, with China reporting a surprise trade deficit of $7.3 billion, the largest the fastest-growing developing nation has seen for seven years and coming as a bit of a shock to the markets. The key to the Chinese trade deficit is that it had been hit by a slowdown in both imports and exports, and this has hit mining companies pretty hard today, with investors fearing metal demand could have slowed in the region. The result has been to drag the heavyweight mining sector lower by 3.7%, and this has been a key drag on the FTSE 100 Index today.
Following on from the Chinese data was the move by Moody’s to cut its credit rating on Spanish debt by one notch to Aa2. The news has been an unwelcome reminder about the fragility of sentiment on sovereign debt within the eurozone and has not been received too well, particularly in the context of the high price Portugal had to pay for its bond sale yesterday. The downgrade brings back to the headlights the possibility of a Greece or Ireland type bailout being needed, should confidence wane in the country’s ability to meet its debt obligations.
Allied with the Spanish credit rating downgrade and Chinese trade deficit stories, we also have jobless claims rising more than expected and the crisis in Libya and the Middle East looking like it is not going away anytime soon. The fall in the price of Nymex and Brent Crude Oil has done little to entice traders back into the market.
The FTSE 100 is now nearing important support levels of 5824, whilst the Dow Jones is also nearing support levels of 11980. Should these indices break below these crucial support levels, it could open the markets up for a more significant correction. That said, a quick bounce higher from these levels could entice bargain hunters back into the market.”
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CFD and Spread Betting Market News: FTSE 100 Hits New 5-week Low as Correction Threatens