Betfair Official Blog

Daily View - 8th February

Germany at odds with the rest of Europe again, although this time on interest rates...

Well the Bank of England lived up to expectations, and we now sit with interest rates 'merely' 2.25% above the US and some 5% above Japan and even 0.75% above China.

Today the FTSE is looking to rebound some 60 points from the close yesterday, as investors try to recoup some of Thursday's 150 point fall. The retreat, triggered by the 0.25% cut from the BOE, always looked overdone for the session, and punters were hoovering up distressed stock in late trading yesterday. Clients were especially interested in Banking and Telecoms stock after they suffered heavy selling in early afternoon action. Banks are not known to be natural dividend slashers so 7% looks very attractive in the current weakening interest rate environment.

The early price on the FTSE is at 5775-5776 but it would not be a surprise to see more on the plus side after such a gloomy week. Early action has a habit of failing to predict the eventual direction of the markets so it would be wise for traders to not get too carried away with any attempt to 'bottom pick'.

The big loser over the past two days has been the Euro. Whilst Germany might be calling for higher rates, the rest of Europe is crumbling under the weight of a strong currency coupled with a (relatively) tight fiscal stance. At the minute, the ECB has stood aloof from their cries for help, but suddenly there appears to be a crack in the facade and the olive branch of easier money seems to have been waved.