Betfair Official Blog

The calm after the storm

Daily View - 18th March...

Well we could be in for a bit of relief today as the markets all seem to have stabilised to some extent since the dramas of Friday, and Monday morning.

Rumours that Lehman might be next in line for implosion after DB Singapore apparently refused their name in the money markets were quickly quashed. The stock was at one point some 50% down on the day at around $20.50, but later bounced as investment banks rallied round and closed 'just' 23% off at $30.50.

Hence banking stock is likely to be the big mover this morning with HBOS, Barclays and RBS likely to bounce from yesterday's panic. With much of the bigger banks' revenue coming from foreign shores, the fall in the pound may well make those earnings look rather tasty. Whilst we might look with trepidation at the current situation for the US, UK and parts of Europe, it cannot be denied that the rest of the world is doing fine thank you for asking.

As expected, markets are a tad quiet in the pre-opening hours, with the Dax now moving 100 higher to 6290 and the FTSE up at 5515. There will be talk of 'dead cat' bounces etc, but nearly all eyes will be focused on the Fed rate announcement this evening at 7:15. Expectations range from 0.5% - 1.25% (can you have a negative interest rate?) cuts which will probably give us one of those big rallies that the Americans are so used to these days.

The Dow bounced off the 11750 support yesterday, and the S&P found some help at the same low as that hit in the fallout of January at 1255.0. Bear markets are, seemingly, just not tolerated in the US, where the right of investors to make money buying shares appears to be almost enshrined in the constitution. Short selling of stock is still almost unheard of for the average US investor (most brokers require 50% margin to allow a client to sell stock he does not own), and anyway, profiting from falling stock prices is an almost 'un-American' activity.

Commodity markets had a pretty solid reversal yesterday, after the huge early move in Gold was completely turned over by the close. Oil also fell $4 to 'just' $102.00 for Brent.