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Spreadex Market Update

Tuesday, June 26, 2012 - Afternoon Market Update
David White
Financial market analysis from Spreadex financial spread betting trader David White

Austerity not working?

The story concerning UK investors today is that of signs austerity might not be working.

Not unlike the rest of Europe, the UK has debt relative to output not seen since times of war, with the government’s balance sheet expanding in a similar fashion to that of, say, Japan’s soon after the stock market collapse of the early 90s.

The figures released today show that government spending increased and tax receipts fell, the result of a greater dependency on welfare and a weakening economy. Hardly optimistic.

But, like Japan’s policy makers of the day, the Bank of England stands ready to act, willing to pump more cash into the real economy using money markets as trustee.

If the BoE acts in a way that interest rate markets anticipate and bankers desire, risk takers could soon be rewarded. And the stock market might offer itself as one of the paths of least resistance for money fresh off the press.

Not surprisingly, then, risk assets have largely ignored the prima facie bad news today and continue to price downside risks against central bank action.

The Trading Day and Week Ahead

For further information on the trading day ahead, take a look at our Financial Diary, which previews all the Economic Data due out to today and projected or previous figures.

Our Financial Diary is updated in real time as the figures are released throughout the day.

If you are unsure what different Economic Figures mean take a look at our Economic Indicators Explained guide.

For a look at the trading week ahead our Financial Diary also lists all the companies due to submit trading updates this week. Each Friday, our diary will preview the forthcoming week's economic indicators and company reports schedule.

For market trends and analysis, don't forget our charts have automatically generated support and resistance trend lines helping aid your financial spread betting with technical analysis. For more help on using our charts, view our Guide to Trading with Charts?


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