Equity market gains short lived ahead of UK GDP number - Spread Betting and CFD Trading

LONDON, ENGLAND, January 27, 2011

Spread betting expert Sean Power of City Index (http://www.cityindex.co.uk/) takes a look at market activity on 25th January, including a positive start to the day for Europe's equity markets.

"Equity markets across Europe started the day in positive mood following a strong US session yesterday evening and better than expected results from Siemens this morning. However, gains were eroded shortly after the opening bell as commodity prices weighed heavily on the UK mining index.

Yesterdays US session saw intraday highs of 11,982 for the Dow and 1291 for the S&P, both reaching highs not seen since 2008. Both closed around highs of the day which convinced Europe that this morning's session should begin positively. European equity markets opened in positive fashion with the FTSE100 posting an early morning high of 5964 (+20 points), the DAX a high of 7102 and the CAC40 a high of 4056.

This morning's positive tone was also assisted by Siemens, the German engineering group, who beat analysts' estimates with a 17% rise in profits. Siemens, who is a large exporter to BRIC countries, confirmed that profit excluding acquisitions or disposals increased 17% to EUR1.79bn, beating estimates of around EUR1.53bn for the period October to December.

However, early morning gains were short lived in Europe as investors awaited UK GDP data at 9.30 GMT. By 8.30 GMT the FTSE had dipped into negative territory and its European counterparts had given up around half of their gains. The UK equity market was dragged lower by the heavily weighted mining index as weaker commodity prices took their toll on the sector, copper was trading down around -1.5% with silver down around -2.5%. The biggest losers on the FTSE100 were Randgold Resources (-2%), Kazakhmys (-1.9%) and African Barrick Gold (-1.9%).

Investors are now looking for UK GDP to revive this morning's flagging equity market. UK GDP, due out at 9.30 GMT, is widely expected to have gained +0.5% (Quarter on Quarter) and +2.6% (Year on Year); note that the +0.5% will be a slow down from the prior of +0.7% from the previous quarter. Investors will be looking for data to at least match expectations, should it not then this early morning sell off may gain momentum, at least until the US market can tell us otherwise."

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