Sell Stampede Continues as Traders Look to Non-farm Payrolls - Joshua Raymond, City Index

LONDON, August 5, 2011 -

As the sell stampede continues, investors this morning (August 5^th) woke up to sharp new losses for the FTSE 100 and Royal Bank of Scotland, the prices of which fell by up to 3% and 20% respectively. Joshua Raymond of spread betting provider City Index (www.cityindex.co.uk/) considers the catalysts behind one of the worst European trading weeks in recent memory - and why traders may be looking to non-farm payroll numbers today for a potential opportunity.

“All heavyweight stock sectors - miners, banks and oil have traded heavily lower once again,” states the Chief Market Analyst. “In truth however, dealing screens are filled with red across the board and as such the FTSE’s losses over the last 48 hours have been speeded by broad based selling across multiple sectors.”

On the prime motivations behind the crash, Mr Raymond explains: “It’s hard to pinpoint the trigger for this week’s stock market crash. Certainly the US debt situation has brought into focus the fragility of the path ahead for US growth, a factor merely exacerbated by the weaker than expected US economic data, which is becoming an unfortunate trend. The fact of the matter is that this week’s losses have been speeded by an investor stampede to join the ranks selling in an effort to prevent themselves from being caught out on the long side when asset prices are sharply falling. Stops being triggered along with the fact that this week’s falls have occurred in the month of August, when most fund managers are on their vacations have hardly helped.”

Non-farm Payrolls

“Non-farm payrolls will be the big focus for the day and it gives investors another crucial opportunity at a time when sensitivities are incredibly high to gauge the US employment situation. The market is expecting non-farm payrolls to come in at +75,000 jobs, with private payrolls increasing by +105,000 and the unemployment rate holding stubbornly high at 9.2%. A strong payrolls number could be enough to trigger some decent bargain hunting in the afternoon session but it’s hard to envisage investors wanting to carry too much risk into the weekend.”

Financial trading expert Joshua Raymond regularly publishes his views and insights on the news activity shaping the markets on City Index’s website. Visit www.cityindex.co.uk/market-analysis/ to see his latest financial news.

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Contact: Joshua Raymond, City Index Group, Tel: +44(0)20-7107-7002, Email: joshua.raymond[at]cityindex.co.uk