BetOnMarkets

After a positive first half of the week, global equities are serving a reminder of just how difficult bear markets can be. Traders are quick to grab whatever short term profits they have made, making it difficult for rallies to build momentum. Banking shares have reversed a good chunk of the gains made over the last few days, but are still holding above the closing levels from last week. Today worry isn’t specifically related to complex financial deficits, fears are more in relation to general analysis that banks are not the place to be in during a recession. With house prices continuing to plunge on both sides of the Atlantic, rising unemployment and an increased risk of default on loans, the recession itself is enough put pressure on banks. This is before you take into account their dire capital adequacy positions.

BetOnMarkets.com

Financials are still enjoying some follow on buying, but gains have been trimmed from earlier in the day. The main culprit for today’s fall in the FTSE, for once isn’t the banks, but the energy sector. BP and Shell make up a sizeable chunk of the UK’s benchmark index, so with crude down around 5% on the day, it is always going to be difficult for the FTSE to make traction.

After the excitement over yesterday’s new home sales coming in at better than expected, the US housing slump is still showing of signs of abating. Sales of homes may have increased more than expected by volume, but prices are continuing to plumb new depths. The 10 and 20 city indices are down over 25% from their peak and over 18% on last year. House prices are now back to 2004 levels with further to go if the current trend line is anything to go by.

BetOnMarkets.com

The FTSE is currently indicating a flat opening, as traders wait for the release of the BBA mortgage loans number. While the Bank of England can cut interest rates, as long as banks are not lending money to credit starved business and consumers the economy is going to struggle. Should the loan number be better then expected look for the retail and manufacturing stocks to get a nice boost.

Crude oil fell from a two-week high on speculation recession in the world's largest economies will curtail demand for fuel and energy. A report later this week will probably show the U.S. economy shrank 5.5 percent in the fourth-quarter, the fastest pace in 26 years. White House officials are working to get President Barack Obama's $825 billion stimulus package approved by mid-February to create or save as many as 4 million jobs.
Oil prices will likely spend most of the week near the 40 dollars per barrel level.

Predicted opens as of 06:00 GMT
FTSE: 4053.0 (+8.2)
CAC40 2849.70 (+6.20)
DAX30 4173.80 (-7.0)
DOW: 7987 (-77)
SP500 821.60 (-4.63)
Gold: 891.40 (-1.03)
Oil: 45.73 (-0.48)

BetOnMarkets.com

Please find below the Morning Report from David Evans, market analyst at BetOnMarkets.com

The FTSE is currently indicating a higher opening, as traders are looking for value after a three day sell off. While there is no UK economic data today, there will be plenty from our neighbors from across the ocean which will more then likely affect the London Index.
The FTSE will probably spend the day in positive territory.

Crude oil gained more then 6% on speculation a bank-rescue plan by the new US president will help boost economic growth and increase fuel demand. Prices could fall on speculation that the U.S. crude-oil inventories rose last week when the inventory numbers are released at 11 a.m. today a day later than usual because of the Martin Luther King Jr. holiday on Monday.

Predicted opens as of 6:00 GMT
FTSE: 4138.3 (+73.3)
CAC40 2976.30 (+75.50)
DAX30 4355.2 (+102.20)
DOW: 8235 (+12)
SP500 842.73 (+2.75)
Gold: 852.45 (+1.10)
Oil: 43.93 (+0.42)

BetOnMarkets.com

Please find below the Morning Report from David Evans, market analyst at BetOnMarkets.com

The FTSE is currently indicating a lower opening, as traders are preparing for the release of the UK Consumer Price Index. Everyone is hoping that the inflation index will show that the average consumer is now getting more bang for their buck, analysts are expecting a drop of 0.9%. Should the number come out better then expected, the FTSE should get a nice boost.

Oil prices fell yesterday as slowing world demand, reduced tension in the Middle East and settlement of Russia\'s gas dispute with Ukraine has reduced some risk of uncertainty from the market. Some analysts are talking about oil jumping back into the 65 dollars per barrel level later this year, mainly on reduced output by OPEC and other producing countries. In the mean time, oil is probably going to dip into the 38 dollars per barrel level.

Predicted opens as of 06:00 GMT
FTSE: 4096.7 (-12.80)
CAC40 2979.70 (-7.80)
DAX30 423.60 (-14.70)
DOW: 8191.00 (-38)
SP500 840.23 (-2.50)
Gold: 830.78 (-6.90)
Oil: 40.52 (-0.31)

BetOnMarkets.com