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DanielaIG

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  1. DanielaIG

    Where to find overnight funding charges on FX pairs

    Hi @hart, as @Caseynotes mentioned, this functionality has only been added to the new web platform so you would need to switch in order to view it.
  2. When trading currency pairs, if a position is held through 10pm, it will incur an overnight funding charge. This charge is based on the interest rate differential between the two currencies in the pair, where you receive interest in the currency you buy and pay interest on the currency you sell. Swap rates also apply to cryptocurrencies and spot gold, silver, platinum or palladium. Based on client feedback we have now added these overnight funding charges to the platform. Please keep in mind that they are indicative figures. These swap rates are viewed from a watchlist. Once you have an FX pair on the watchlist, by clicking on the three lines that are positioned on the left-hand corner next to the word 'market', a drop down of columns will appear. Click on the swap bid and swap offer buttons to activate them. What does this mean for me? If GBPUSD was quoted as 0.22 / -0.85 then the 0.22 would be what you receive if you are short, and the 0.85 would be what you pay if you are long. You then need to do the trade size times this value. For example a spread bet of £3/pt on the short trade would result in a credit to your account of 66p (which comes from 0.22 x £3). If you have a CFD account and you're holding a single $10 contract long, you would pay $8.50 per night (which comes from 1 contract x $10 x 0.85). Where does this figure come from? The figure is shown in points and depending on the currency you hold and the direction of your trade you can either earn or pay a premium, keeping in mind that there is an IG charge of 0.3% (0.8% for mini contracts and spread bets) included in the calculation. If you are long on a currency pair, you will need to focus on the swap offer, and if you are short you will focus on the swap bid. If the swap is a positive number, you will be credited, because the interest rate on the currency you are buying is higher than the interest rate on the currency you are selling. If the rate is a negative number you will be charged, because the interest rate on the currency you are buying is lower than the interest rate on the currency you are selling. If the interest rate on the euro is 0.25% and the interest rate on the USD is 2.75% and you buy EURUSD, you will be receiving 0.25% but paying 2.75%, and will be left with an interest rate differential of 2.5 points (excluding the IG change). Example: Let us take EURUSD as a worked example. We will need two figures for our calculation, the underlying market swap rate (known as the Tom/Next rate, which is provided by the banks), as well as the current spot rate of the currency pair at 10pm. The below figures are indicative for this calculation. An example of the underlying 'Tom/Next' rate for EURUSD: 0.34 / 0.39 An example of today's Spot FX rate for EURUSD at 10pm UK time: 1.0650 Once we have the Tom/Next rate, we take the 10pm EURUSD spot rate (in points) and multiply by IG's charge of 0.3% (or 0.8% for CFD mini or Spread Betting deal), which is then divided by 360 days to get an overnight value. = (10650 x 0.3%) / 360 = 31.95 / 360 = 0.08875 This is then applied to the underlying market quote of 0.34 / 0.39 Bid = 0.34 - 0.08875 = 0.25125 = 0.25 Offer = 0.39 + 0.08875 = 0.47875 = 0.48 This then gives us our overnight funding rate, inclusive of IG charge, of 0.25 / - 0.48. The '˜Offer' is negative, because currently there is a higher interest rate on USD than there is on EUR. Therefore, buying the pair would leave you paying a larger USD interest vs receiving a smaller EUR interest. E.g. If you were long one main lot, you would do 'Number of Contracts x Contract Size x Tom Next Rate'. Using the information above, if you were long one main lot, your 'Daily FX Interest' would be: 1 x $10 x - 0.48 = $4.80 charge per night. (Conversely if you were short, you would receive $2.50 per night). Important factors to note. FX settlement of T+2 means that if you hold your trade through 10pm Wednesday (UK Time) then you'll need to incorporate the weekend into the calculation, and therefore you'll have an 'FX Interest Charge' of 3 days. This is because currency can't settle at the weekend, and the new spot rate would therefore fall on a Monday. It also follows that if you hold through 10pm on a Friday, you only receive a 1 day charge (even though you have to hold through three days before you can close the position). Settlement of FX can't take place on public holidays. Therefore, over periods such as Christmas or Easter, or public holidays such as Martin Luther King Day or Thanksgiving, you may see interest charges for a variable number of days. Some currencies trade on a T+1 basis, most notably USDCAD, USDTRY and USDRUB.
  3. DanielaIG

    Book Cost

    Hi @Ara, Total book value cost has to be added manually by adding stamp duty and commissions to the cost of buying the shares. We do not offer an automatic book value cost calculator, as this will also depend on the cost associated with closing the position. Regards, Daniela
  4. Theresa May´s cabinet is set to meet today in order to try and find a solution to the Irish border crisis, the main headache for Brexit talks in the last few months. As a result of the uncertainty regarding a Brexit deal, the GBP weakened against its major pairs, falling by almost 1% against the US dollar and 0.2%against the Euro. The Dow Jones lost 2.32% on Monday falling by 602 points to close at 25,387.18, after Apple suffer another hit and worries over global trade continue. The Nasdaq re-enters correction territory as it lost 2.8% to close at 7,200.87. Goldman Sachs shares suffered their biggest loss in 7 years, leading the S&P 500 to drop 2% to close at 2,726.22. The fall comes after the Malaysian finance minister demands a full refund of the $600million fees they paid To GS in order to help set up the fraudulent state investment fund 1MDB. Cigarette shares dip on Monday as the US Food and Drug Administration (FDA) consider banning menthol cigarettes. The fall was led by British American Tobacco that lost almost 11% closing at 2.962,50 as investors fear over the future of the newly acquired US menthol brand Newport. A smaller than expected demand for vaping products has also led to the company´s revenues to miss targets for the year so far. Italy has reached its deadline to submit a revised budget draft to the EU but, despite pressure from Brussels, Italy shows little signs of altering its budget as it targets to boost government spending. Because of this, Italian bond years rose again on Monday, increasing between 1.3% and 3.5% across the curve. Asian markets start the day in the negative territory but seem to recover into the afternoon. The Hang Seng dipped to 25,092 at the open but has recovered in the afternoon trading above Monday's closing price. The Nikkei 225 has been trading at a 2% loss from the previous close whilst the ASX 200 is ending the day 1.8% lower. Airline stocks have been hurt after the OPEC cartel announce they are looking to stabilise oil prices by reducing supply after prices have fallen around 20% in the last month. International Consolidated Airlines (IAG) closed 0,9% lower on Monday at 637,60. Asian overnight: Asian markets followed their US counterparts lower overnight, with a sharp deterioration in Apple shares sending tech stocks lower in markets such as the Topix, ASX 200, and South Korean Kospi composite. This came after two of Apple’s suppliers cut their earnings forecasts, causing markets to worry whether iPhone sales had peaked UK, US and Europe: The Pound has had a tough start to the week as the markets start to factor in the possibility of a “no deal” Brexit. As it is becoming increasingly possible that Theresa May is not going to be able to pass a deal in Parliament before the deadline on March 29th, the pound is starting to come under pressure against major currencies such as the Euro and the US Dollar. We can expect the Pound to trade with increased volatility this week as key meetings will shape whether there is a possibility of a Brexit deal to fit all. The Brexit negotiations have come under heat as Theresa May has tried to create a UK customs union in order to avoid a hard border on the Island of Ireland. But the EU has rejected this idea by enforcing the backstop plans which lock in the UK in a relationship with the EU which cannot be ended without the EU´s permission. We can expect the Pound to trade with increased volatility this week as key meetings will shape whether there is a possibility of a Brexit deal to fit all. After the recovery from the 2008 financial crisis, the stock markets have been performing seemingly well keeping a consistent uptrend throughout the years but the trading activity of the last month have left investors worried over the health of the financial systems. As earnings have been consistently increasing and companies are performing well, there have been talks about how long this sustained growth can last, questioning if the markets have reached their boiling point. After October became one of the worst trading months in years, the month of November had seemed to bring some relief to stock markets, but after Monday's sharp decline it shows that the markets remain volatile. All it took was bad production figure for Apple and possible regulatory action against Goldman Sachs to send the stock market into a downfall. As the potential for a slow down in economic growth and earnings is starting to take place amid ongoing trade wars and rising interest rates, investors are advising clients to remain cautious and reduce the amount of risk by diversifying their portfolios in order to be prepared for the months to come. Looking ahead, UK jobs data provides a focus on the pound, with average earnings expected to rise sharply to a three-year high of 3%. Also keep an eye out for the German ZEW economic sentiment survey, coming in a week that is expected to see the German Q3 GDP reading hit negative territory. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 9.30am – UK employment data: claimant count to rise by 3200 from 18,500 in October, while unemployment rate holds at 4%, and average hourly earnings rise 2.6% in September. Market to watch: GBP crosses 10am – German ZEW (November): economic sentiment to rise to -12 from -24.7. Market to watch: EUR crosses 11.30pm – Australia Westpac consumer confidence (November): index to rise to 103 from 101.5. Market to watch: AUD crosses 11.50pm – Japan GDP (Q3, preliminary): forecast to be -0.3% QoQ from 0.7%. Market to watch: JPY crosses Corporate News, Upgrades and Downgrades Taylor Wimpey said that sales rates grew in the second half, up to 0.77 from 0.71 a year earlier. The current order book was up 9% over the year, to £2.4 billion. Vodafone suffered a loss of €7.83 billion for the first half, arising from the disposal of Vodafone India, higher financing costs and de-recognition of a deferred tax asset in Spain. Experian suffered a 5% drop in pre-tax profit to $470 million for the first half, while revenue rose 7% to $2.36 billion. Allied Minds upgraded to buy at Jefferies Anglo American raised to hold at Global Mining Research Zurich Airport upgraded to hold at Santander Total upgraded to buy at AlphaValue IP Group downgraded to hold at Jefferies ThyssenKrupp downgraded to hold at Bankhaus Lampe Orpea downgraded to neutral at Credit Suisse Sophos downgraded to hold at Shore Capital IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  5. Hi Shamir, Just to clarify: -Short interest: overnight funding cost for holding the position after 10pm UK time - Stock borrowing: commission for "borrowing" the share in order to go short (will only apply to share positions on leveraged accounts) Both charges will charge a 3 day commission on Friday in order to cover the weekend. Hope this clears it up a bit more. If you have any more queries don't hesitate to ask! Regards, Daniela
  6. Hi @1kp1, I have replicated the scenario on both my spread betting and CFD accounts both on Chrome and Internet Explorer and have not encountered the same problem. We have data going back to 2001 for Natural Gas so I doubt it is due to a lack of data points. Maybe this is an issue that has been resolved since you posted it on Tuesday. Could you please check for me and let me know by tagging me using the @ symbol (or give us a call so we can help you in real time). Regards, Daniela
  7. Hi Shamir, So as you mentioned, on cash positions you will be charged an overnight funding charge for every day you hold the position through 10 pm UK time. On top of that, when you enter into a short position on shares, there is a borrowing cost. this is because when you enter into a short position on shares, you are essentially borrowing the stock as you do not physically own it, therefore you will need to fund the ability to borrow the shares to be able to open a short position. This rate is based on a borrow premium that we receive from our brokers which we then add an IG fee of 0.5%. Regards, Daniela
  8. The US Dollar is holding within tight margins as investors are showing discretion ahead of the US Midterm elections that take place today. The Dow closed up 190.87 points at 25,461.7 and the S&P rose 15.2 points closing at 2738.31 led by the financial and energy sectors. The Nasdaq fell 0.38% lower at 7328.85 as Apple and Amazon both fell more than 2% Apple has had its second downgrade since its earning report last week, as Rosenblatt Securities followed Bank of America Meryll Lynch in downgrading Apple from buy to neutral. After this second downgrade, the stock fell 2.8% to $201.59, accumulating a loss of 9.2% since the earnings report. Berkshire Hathaway earnings beat expectations after announcing a $1billion buy-back, sending a strong signal to the market, and closing on Monday at $216.24, up 4.68% Italian Bank shares have suffered a hit as Banco BPM fell 3.4%, UniCredit fell 1.6%, Ubi Banca fell 1.8% and Intesa Sanpaolo fell 2.2% on the back of Goldman Sachs downgrade on Friday. The drop in Italy’s main banks shows a continued uncertainty of the country´s short-term future as the government continues to challenge the European fiscal rules. Inflation has risen 15% yoy in Turkey after pressure to lower interest rates in order to induce spending and economic growth to overcome the country´s “currency crisis”. Uranium prices have hit a 2.5 year high as producers have started to invest in new plants as the demand for nuclear power increases. The price of Uranium has risen by 40% from its lows in April. Crude oil prices continue to fall as continued sanctions and concerns over economic slowdown take their toll on carb fuel demand. Asian overnight: A mixed Asian session has seen the Chinese markets providing the sour note on an otherwise bullish period. Japanese household spending tumbled to -1.6% against expectations, while the RBA kept rates unchanged as widely predicted. However, with recent volatility to consider, the session has been a largely positive and stable one for Japanese and Australian stocks in particular. UK, US and Europe: The midterms are the general elections that are held near the mid-point of a president's four year term of office, it is a combination of elections for the US Congress, governorship and local races. The results will be seen as a sentiment towards Trump's presidency and his accomplishments, and historical results show that disgruntled voters use the midterms to punish the party in power. It is expected that the markets have already factored in an increase in “blue representatives” as it is expected that Democrats will regain control of the House of Representatives Whilst the Us economy is booming with low unemployment rates, Trump's tax cuts for corporations have increased the country's deficit by 33% in the last year. Immigration will be a decisive issue in the voting taking place today, as the Democrats have tried to pull in minority votes by criticizing Trump's "zero-tolerance" policy towards immigration. It is expected that the markets have already factored in an increase in “blue representatives” as it is expected that Democrats will regain control of the House of Representatives and the Republicans will maintain the Senate, resulting in a government gridlock, which has historically seen positive reactions from the US equities markets. The extent of the gains will depend on the potential change in the House as it has decision over social and economic structures. A result that gives the Republicans full control could be seen as positive for the equity market as there could be further fiscal stimulus and tax cuts. On the other hand, if the democrats gain control of both the House and Senate, which is seen as less likely, would likely lead to a negative sentiment in US equities as they could reverse some of the policies in place to boost the short-term economy. An equally impactful situation on the markets would unfold if the future representatives is left unclear after the elections as uncertainty would affect the market sentiment. It is likely that the US Dollar could rally if the result of the elections give full control to the Republicans as Trump's economy boosting policies will continue. On the other hand, the US dollar is expected to fall in the short-term if the elections result in a political gridlock, with the dollar taking further hits if the Democrats regain full control. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 21.45pm - NZD Unemployment rate for the 3rd quarter: expected to fall from 4.5% to 4.4%. Corporate News, Upgrades and Downgrades Wm Morrison saw Q3 sales rise 5.6%, with positive like-for-like for three-years. Interestingly, the wholesale business is also a big performer, growing 4.3%. Same store growth came in at 1.3%. Randgold Resources saw Q3 profitability rise after a round of cost cutting (down 10%), with profits for the three months to September rising 21% on-year to $73.2m. Much of that period saw the company’s Tongon mine in Ivory Coast on strike. Randgold shareholders will vote on Wednesday after a takeover bid from Barrick Gold. DS Smith expects to see a first-half operating profit well ahead of the previous year's result, as the company continues to raise prices to account for increased input costs. KPN upgraded to Buy from Neutral at BofAML IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  9. The European Central Bank is announcing its monetary policy today, with expectations that Mario Draghi will confirm that the ECB stands by its plan to end its quantitative easing program by the end of the year. The euro plunges on Wednesday as concerns over the Eurozone growth continue. Italian government bonds remain at year-highs as the EU has rejected the country's deficit plan. Yields are expected to remain high over the next few weeks as the Italian government says that the budget plan is designed for Italy and not Brussels, suggesting future disagreements between the two. The Canadian dollar gained on Wednesday after the Bank of Canada increased key interest rates by 25 basis points to 1.75%, keeping to expectations. The S&P500 goes into negative territory for the year as it ended 3.1% lower at 2656.10, down 0.65% year to date, and the Nasdaq had its worst one-day drop in 7 years as it fell 4.4% at 7108.4. The Dow Jones has erased all of its gains for 2018 as it dropped 600 points on Wednesday's trading session Markets in Asia fell overnight as they follow the US major stock indices sell-offs. Oil prices have also suffered from the global stock market slumps as prices have fallen by 1% due to selloff pressure. Asian overnight: Asian markets followed their US counterparts lower overnight, with a massive 3% decline in Japanese stocks closely followed by their Australian counterpart (-2.8%). The tech-focus continued into Asian markets, after the Nasdaq had its worst day in seven-years. Oil prices slide sharply overnight too, after the Saudi Arabians raised production to 11-million bpd. Could we see the Saudi Arabians begin to drive down oil prices as a gesture to Donald Trump amid the current Saudi crisis in Turkey? UK, US and Europe: The European Government announced earlier this year that it was planning on phasing out of its quantitative easing policy, a crisis-era stimulus with a plan to produce stable inflation and solid growth, signalling that gradual increases in interest rates were to come. But as economic events of the past few weeks have unfolded, the ECBs expected economic health of the Eurozone may not have held up, as there have been signs of weakening growth in some of the countries in the Eurozone and inflation levels have remained below the ECB’s 2% target. ...damage from inside the eurozone has also led to hurting the sentiment surrounding the ability to grow In the recent months, the risk of external shocks has risen, led mainly by continuing trade tensions between the US and China, the high prices of oil due to geopolitical risks, and the prospect of a hard Brexit outcome. Adding to that, damage from inside the Eurozone has also led to hurting the sentiment surrounding the Eurozone's ability to grow. The ongoing disagreements between the Italian government and the ECB regarding budget deficit are a reminder that the European Commission's stimulus to overcome the sovereign debt crisis has not removed the problem of economic divergence between economies of the single currency. This could pressure the ECB to take a more cautious stance on monetary policy compared to the plans it had set previously this year. That said, there are beliefs that the ECB is set to reduce quantitative easing and the concerns over Italy and Brexit are not enough to alter the ECB's message to the markets. As the Euro is starting to see the effects of the tensions within the Eurozone, the US Dollar is managing to regain some consumer confidence as it is seen as a safe haven amid the Italian and Brexit uncertainties. The Canadian Dollar, on the other hand, continues to rise as consumer confidence is backed by the Bank of Canada's decision to increase interest rates as expected, which boosts the perception of a strong economy. Looking ahead, the day is likely to be dominated by the latest rate decision from the ECB, with Draghi and co expected to keep rates unchanged. With fears remaining over how the current standoff between the EU and Italy will resolve, markets will be expecting a cautious approach from the bank. Markets will also be looking out for the German IFO business climate figure. In the US session, the release of core durable goods and the latest trade balance figures will provide some volatility for the greenback. However, many of the US traders will instead look towards the release of earnings data from the likes of Amazon and General Electric as a core driver of sentiment. South Africa: Precious metal prices have gained overnight on some safe haven demand. Base metals trade slightly lower this morning. The rand has weakened following yesterdays Mid-Term Budget speech, underperforming its emerging market currency peers. Tencent is down 2.8% in Asia suggestive of a weak start for major holding company Naspers. BHP Billiton is down 4% in Australia suggestive of a negative start for local resource counters. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 9am – German IFO (October): business climate index to fall to 103.6 from 103.7. Market to watch: EUR crosses 12.45pm – ECB rate decision (press conference @ 1.30pm): no change in policy expected. Market to watch: EUR crosses 1.30pm – US durable goods orders (September): forecast to fall 2.3% MoM overall, and rise 0.3% MoM excluding transportation orders. Markets to watch: US indices, USD crosses 3pm – US pending home sales (September): sales to fall 1.4% MoM. Market to watch: USD crosses Corporate News, Upgrades and Downgrades Lloyds saw a fall of 0.5% in underlying pre-tax profit for Q3, to £2.07 billion. Net income was up 2% to £13.4 billion. BT has appointed Philip Jansen from Worldpay as CEO, taking over on 1 February 2019. WPP suffered a 0.8% fall in revenue for Q3, to £3.758 billion, while nine-month reported revenue was down 1.6% to £11.25 billion. Steinhoff International The Company announced on 5 October 2018 (the “5 October Announcement”) that its subsidiary Mattress Firm, Inc. (together with its U.S. subsidiaries, “Mattress Firm”) was taking steps to implement a pre-packaged plan of reorganization through the voluntary filing of cases under Chapter 11 of the US Bankruptcy Code (the “Mattress Firm Filing”). In conjunction with the Mattress Firm Filing, Mattress Firm also secured certain financing arrangements that come into effect upon completion of the implementation of the plan of reorganization and Mattress Firm’s exit from the Chapter 11 proceedings that are intended to support its business going forward. Air Liquide upgraded to add at AlphaValue Segro upgraded to add at AlphaValue Anglo American upgraded to buy at SocGen Rolls-Royce upgraded to buy at Oddo BHF Orion downgraded to reduce at Inderes Rio Tinto downgraded to hold at SocGen Telia downgraded to underweight at Barclays Valeo downgraded to neutral at MainFirst IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  10. DanielaIG

    Does volatility affect IPOs?

    The music entertainment arm of Tencent, which has 800 million users across a variety of platforms in China, had originally planned to go public in the United States imminently. The IPO was initially set to launch as soon as this week but has now reportedly been delayed because of the recent global sell-off. It is not the first company to pull out or postpone an IPO in the recent weeks, and whilst Tencent have declined to comment on the decision, it’s likely to be on the back of volatility seen in the equity markets. Companies prefer stable market conditions to launch their IPOs because they are more likely to be able to correctly predict their valuation and generate the required funds. They usually have a set figure they are trying to raise and offer shares accordingly. If market conditions are stable, companies are more likely to be able to predict if their target value is likely to be raised. In volatile markets, like the one experienced last week, market perceptions on financial stability and future economic conditions start to show In volatile markets, like the one experienced last week, market perceptions on financial stability and future economic conditions start to show. If the most important stock indices suddenly drop, there is a consensus that future economic stability might be in jeopardy. Company’s futures are questioned and therefore the perception of such are hindered. If investors have doubts about the future of a company’s operations and earnings capacity, they are less likely to devote a part of their capital to such company. Volvo (owned by the Chinese multinational automotive company Geely) have also recently backed out of an IPO, stating that the ongoing trade wars are to blame. Volvo exports vehicles from China to the US and is therefore at the centre of the tariffs to be imposed by the US government on Chinese goods. The reasoning is clear, tariffs on their car exports are going to affect the company’s ability to generate earnings. Therefore, investor’s sentiment towards Volvo will have worsened, meaning that if the company launches an IPO, the value they will place on the shares will be lower. So why did Aston Martin decide to go forward with its IPO earlier this month? So why did Aston Martin decide to go forward with its IPO earlier this month? Well, the primary reason is the fact that they are a UK based company, meaning that they are not at the centre of the trade wars currently taking place between the US and China. This does not mean that they are free from turmoil, as worries over Brexit and US tariffs on EU cars are still concerning to investors. What also helps is the diversification seen on their order book. Whilst the UK remains their biggest market seeing 30% of sales, mainland EU sees 25%, with APAC and the US seeing 24 and 20% respectively. Geographically diverse revenue streams should have helped dampen these worries, resulting in Aston Martin making its market debut on the 3rd of October. We didn’t see that on IPO day, with investors less than willing to match the valuation. The share price has been moving down from its initial opening price of £19, shedding over 20% in the first couple of weeks trading. Not a great result. When we look at volatility vs the number of IPOs over a 15 year period we can see a correlation between the two. Of course you’ll have outliers, and whilst a company can benefit from launching in a volatile market, generally the lack of uncertainty and an increase in volatility reduces that. Souce: Renaissance Capital When we look at the specific case surrounding Tencent Music, we can see that Tencent Holdings dropped with the rest of the market on Thursday, from around 286 to 268. On a longer time frame Tencent have come off nearly 18% in October alone, and whilst some of that price action has recovered it does beg the question: is it really a good idea to launch your IPO when your market value has dropped so suddenly? What if the opposite happened, would it be more favourable to launch an IPO if your share price has suddenly risen? Source: IG Dealing Platform A clear strategic roadmap, a realistic valuation, and an accurate financial forecast performance all rely on a calm landscape Put simply there is still volatility in this situation, and there is a lot of movement going on in the market. Predictions on how to accurately value a company, irrespective of buy side or sell side volatility, are far harder, making an IPO far less likely. There are a number of IPO guides out there which can make for interesting reading, and a very good blog post from an ex-president of NYSE Group, Tom Farley. Whilst he does lay out obvious requirements such as having the right executive team on board, a good business case for going public, and good audit processes, a number of other factors come down to accuracy and forward looking speculation. A clear strategic roadmap, a realistic valuation, and an accurate financial forecast performance all rely on a calm landscape. All of these things become exceptionally harder during times of high volatility. With the recent spikes in the VIX there’s an argument that says companies should hold off on their IPO. With that said each new proposed listing should be viewed on a case by case basis. You can register your interest for upcoming IPOs with IG to make sure you’re kept in the loop here. https://www.ig.com/uk/investments/share-dealing/ipos Any questions, please feel free to add them below.
  11. The Dow Jones continues its tumble, losing more than 1,300 in two days, as worries over interest rates and trade barriers continue. The S&P dropped 2%, bringing its October losses to 6% The sell off in the US also saw sell offs in Europe, with FTSE down 1.9%, DAX 1.3%, CAC 1.8% and EU STOXX 1.95%. The VIX rose almost 9%, reaching it’s highest levels since February this year Despite rising interest rates and a booming economy, bank stocks are trading lower, reaching bear market, ahead of earnings reports. XRP and Etherum lead the cryptocurrency downfall which has lost $6 billion in a day. Gold hits its highest price in two months on Thursday after a rough 6 months. As a typical safe haven asset, people have turned to gold in the last few days as world stocks tanked. Despite the ongoing trade wars with the US, China has reported a trade surplus of $34.13 billion in September, which economists believe is due to increase orders before the tariffs are enforced, which is likely to have an impact on the months to come. Asian overnight: A degree of recovery has been seen in Asian markets, with a general rebound in risk appetite. US markets were more mixed, but futures have begun ticking higher ahead of bank earnings later today. Oil prices also recovered, after suffering sharp losses earlier in the week. Regarding the downfall in cryptocurrencies, although the direct cause is unknown, the recent negative sentiment towards cryptocurrencies from important financial institutions could have led to the downfall. Alternatively, it could be a market triggered sell-off, where people are looking to move cash into safer assets. Meanwhile, BitFinex has suspended fiat deposits and stopped accepting bank transfers despite initial denials. The suspension raises fundemental questions about its operations. "JP Morgan is expected to post a 30 per cent increase in third-quarter profits year-on-year, according to analysts polled by Bloomberg" UK, US and Europe: Dow dropped a further 545 points on Thursday, bringing its 2 day loss to 1300. The S&P dropped 2%, bringing its October losses to 6%. Tech sector is worst performer, losing 4.5%, while financial sector is 2nd worse. Global equity markets are today rebounding from the selloff we have seen this week, rebounding to around 25500 from the market low of around 25000 at the close yesterday. With the underlying global risk catalysts remaining in play, markets will be assessing whether todays move is one which is sustainable or not. Metal prices are modestly lower this morning after staging a rebound yesterday which gained significant traction into the afternoon. The dollar is softer, while the Euro and British Pound are the better performers amongst the majors today as Brexit discussions show signs of progression. Bank Earnings season kicks off today with three big players standing out: JPMorgan, Wells Fargo and Citigroup. Analysts are forecasting that banks will post their highest profits since the financial crisis as they are said to enter a “golden age”, fuelled by rising interest rates. According to the FT, "JP Morgan is expected to post a 30 per cent increase in third-quarter profits year-on-year, according to analysts polled by Bloomberg". Across the broad sector, earning are expected to rise 17.7% and revenue increasing by over 7%. When interest rates increase, banks should have more room to increase the rates they charge on loans, relative to the rates they pay out on deposits; this would allow banks to increase their interest margins. But if the increase in rates is deterring customers and businesses from borrowing, then that would hinder bank profits. This means that, despite the general positive outlook regarding the US economy, there are some investors that are becoming sceptical about how long this continued earnings growth can be sustained. They believed that the reason why banks’ profits have been strong throughout the year has more to do with corporate tax cuts than with rising profitability. One of the biggest worries is a weak loan growth, being led mostly by mortgages. South Africa: The rand has continued to claw back strength. Tencent Holdings is up nearly 7% this morning suggestive of a strong start for major holding company Naspers. BHP Billiton is up 1.3% in Australia, suggestive of a positive start for local diversified resource counters. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 3pm – US Michigan consumer sentiment (October, preliminary): expected to fall to 98.5 from 100.1. Market to watch: USD crosses Corporate News, Upgrades and Downgrades Man Group reported a small rise in assets under management for Q3, to $114.1 billion from $113.7 billion. The firm will establish a new holding company in Jersey in order to help deal with growth in the US. Ashmore saw a 3% rise in assets under management for the three months to 30 September, to $76.4 billion, as clients responded to increased volatility across emerging markets Tiger Brands: the Ekurhuleni Department of Health issued a Certificate of Acceptability to the Company for the Germiston processing facility. This endorses the factory’s standards and operating procedures for the safe production of food products. Production of ready-to-cook products, comprising bacon and frozen sausages, is expected to commence on 12 October 2018. Salami production will also commence on this date. Kvaerner Upgraded to Buy at SEB Equities Siltronic Upgraded to Hold at Berenberg Covivio Upgraded to Add at AlphaValue Paddy Power Upgraded to Hold at Berenberg Magnolia Bostad Downgraded to Sell at SEB Equities IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  12. El rendimiento de los bonos es el retorno que recibe un inversor por invertir su dinero en bonos del Estado. Cuanto mejor sea la previsión económica del país, más segura será la inversión en bonos y por tanto será menor el retorno requerido por inversores, que se traduce en un menor rendimiento del bono. De ahí la explicación de la relación inversa que mantienen el rendimiento de un bono con la previsión económica del país y, por consiguiente, su precio. El problema italiano surge de la posición del gobierno populista italiano de desafiar a la Unión Europea y establecer un plan de déficit más agresivo de lo esperado. Este presupuesto se encuentra fuera de los márgenes establecidos por la UE, lo cual asustó a los inversores ya que Italia se encuentra bajo enorme presión para controlar su situación financiera porque su ratio de deuda-PIB es más del doble del límite permitido en la eurozona. Si el consumo del gobierno italiano no se controla, el país podría sumergirse en una crisis financiera similar a la de Grecia, lo cual pone una enorme presión sobre la Unión Europea para controlar la indisciplina presupuestaria de Roma. A pesar de que el miércoles 3 de octubre el gobierno italiano cedió a la presión de la UE y anunció que reduciría sus niveles de déficit para los tres próximos años, las expectativas acerca de la estabilidad y seguridad del gobierno italiano siguen siendo bastante negativas. Evidencia de lo anterior es el incremento del diferencial entre el bono italiano a 10 años y el bono alemán a 10 años, el cual se usa como referente para el riesgo soberano; dicho diferencial alcanzó un nivel de más de 300 puntos durante la semana pasada, el más alto desde marzo de 2014. Este incremento en los rendimientos de los bonos italianos demuestra que los inversores siguen cautelosos ante la habilidad del gobierno italiano de cumplir los mandatos europeos y creen que la economía italiana sigue siendo muy inestable, por lo cual requieren rendimientos más altos para compensar por el riesgo que asumen.
  13. Regarding your question @PandaFace, we do not currently offer bond yield to trade on IG. We offer a selection of bonds, one of them being the Italian BTP. During the last 20 days we have seen a 7.31% movement in the market of the BTP offering a good level of movement for trading. I will attach below a document that shows the product details just in case you are interested in trading the Italian BTP. https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/what-are-ig-s-bonds-spread-bet-product-details
  14. Following a few questions from clients regarding the surge in Italian bond yields in the last week, I have put together a quick overview of why this has taken place. Bond yields are the return an investor is going to earn for investing its money in government bonds. The better the outlook of a country’s economy, the safer the investment will be and the lower the requested return from investors, hence a lower yield. Therefore, bond yields are inversely related to their price and the perception of strength within a country’s economy. The issue with Italy is the fact that the Italian populist government announced a more fiscally aggressive deficit budget than was anticipated. This budget was out of EU-mandated guides, which spooked investors, as Italy is under enormous pressure to control its financial position because its debt-to-GDP stands at more than twice the eurozone’s permissible limit. If Italy’s spending is not controlled, it could face a Greek-style debt crisis, putting a lot of pressure on the EU to control Rome’s budget indiscipline. Despite an announcement on Wednesday the 3rd of October, where the Italian government gave in to EU pressures and reduced the spending deficit for the next 3 years, the sentiment regarding the safety of the Italian government is still very low. This is evident because the spread between the Italian 10-year bonds and the German 10-years bonds, which act as a benchmark for sovereign risk, rose more than 300 points last week, the highest level since March 2014. This increase in government yields proves that investors are weary of the Italian government’s ability to stick to EU guidelines and believe the Italian economy is very unstable, therefore requiring higher returns to compensate for the uncertainty. I hope you find this piece clarifies the current events, if you have any questions just ask. Feel free to "@" me in your discussions.
  15. Aston Martin looks set to miss out on a spot in the FTSE 100 after the luxury carmaker cut the maximum valuation it is seeking in its initial public offering today, bloomberg reporting IPO price at £19. Telecoms and industrials pushed the Japanese Topix, so watch their partners on the European open, whilst miners faired well in Australia. The miner heavy JSE is likely to follow suit this morning. The Dow Jones hit a record closing high, but a drop in Facebook shares weighed on both the S&P 500 and Nasdaq. FANG stocks, kept the Nasdaq in check. Facebook closed down 1.91 percent. Euro strengthens during Asia Pacific trading hours as Italy plans to cut its budget deficit. Oil prices eased slightly after rallying for three straight sessions, but remained close to four year highs. Boris savaged May’s Chequers plan as he made a pitch to the tory faithful for his own policy agenda. DAX is going to be trading out of hours as it is a public holiday (German Unity Day) Asian overnight: A largely bearish session has seen the Australian ASX 200 provide the one bright light in an otherwise downbeat period. That comes despite a more than 9% drop in housing approvals for August, dragging AUDUSD lower. Emerging market currencies were sold heavily in the session, with the Indian Rupee in particular continuing to lose ground against the dollar. Oil prices dipped on Wednesday, weighed down by a report of rising U.S. crude inventories and an expected increase in production. U.S. commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Despite this, prices remain near four-year highs reached earlier this week ahead of U.S. sanctions against Iran's oil exports that kick in next month. Official weekly government data is due from the Energy Information Administration (EIA) today at 15.30 BSP. UK, US and Europe: US dollar strength is having an effect on EM currencies with the Indian rupee hitting record lows, and the Indonesian government stepping in to support the rupiah. Knock on effect to respective indices could be one to watch. Mays speech today in Birmingham will be key and a big test as she is trying to contain civil war. Mays speech today in Birmingham will be key and a big test as she is trying to contain civil war. She’ll call for unionism and insist she is fighting for a Brexit deal in the nations interest. Key things to look for will be her decision on the border – she is due to speak at 10:00am BST. Italy seems to give into EU-mandated austerity as the government will stick with its plan for 2.4 percent for 2019, while reducing the targeted gap to 2.2 percent and 2 percent for the two successive years respectively, according to Corriere. The government had originally said it would aim for 2.4 percent for all three years. Developed countries sovereign bond market and the term ‘volatility’ do not go hand in hand. For Italy this is a bit of a problem who are still seeing sharp swings in their debt markets over 4 months after the populist government was voted into power. Whilst price action on the surface may seem attractive, a lack of substance behind the claims made by Rome to Brussels on planned spending near invalidates a call to action for any investment. At this point we’re seeing momentum trades and speculation, another two words sovereign bonds don’t want to hear about. Those who are interested in this sort of trade could look towards the differential trade against the German bond market, a key barometer for eurozone political tension. Moodys and S&P are set to update their outlooks for Italy this month. Looking ahead, the big European event of note comes in the form of the UK services PMI. Fresh off the back of a disappointing construction number and strong manufacturing one, this release has the biggest impact of the three on UK economic growth. Italy is likely to remain in focus, with the coalition seeking to confirm a budget in the shadow of the EU. South Africa: We are expecting a flat to marginally higher open on the Jse All-Share Index, as US Index Futures trade higher and Asian markets trade mixed this morning. Commodity prices are trading firmer this morning while the rand is slightly weaker against the majors. This is suggestive of a positive start for local resource counters, a notion furthered by the fact that BHP Billiton is up 1% in Australia this morning. Tencent Holdings is down 0.7% in Asia, suggestive of a slighlty lower start for major holding company Naspers. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Tesco reported a 2.2% rise in first-half pre-tax profit, to £564 million, while revenues rose 11% to £31.7 billion. Sales rose 2.2% on a like-for-like basis. The dividend was raised by 67% to 1.67p per share. Vodafone said that its Italian unit had acquired spectrum for the development of new 5G technology for €2.4 billion. Metso Upgraded to Overweight at JPMorgan Siemens Downgraded to Hold at HSBC Atlas Mara Downgraded to Hold at Renaissance Capital IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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