Financial Betting Articles

As expected, the Bank of England snipped a quarter of a percent from interest rates last Thursday. For some reason I feel a lot more comfortable with its steady-handed approach than the US Fed's sweaty-palmed rate slashing. The Bank has judged that the underlying economy is robust enough to weather the maelstrom wrought by the global financial markets. But with the UK economy more reliant on its financial sector than most, the start of the banks' reporting season will let us know if this particular golden goose needs a trip to the vet.

Bradford and Bingley start the ball rolling on Wednesday with their full year results. While not part of the FTSE 100, the country's biggest buy-to-let mortgage lender will set the mood for a three week period that will see the banking giants lay their cards on the table. Alliance and Leicester, HBOS, HSBC, RBS and Lloyds TSB will all publish full year results which are bound to affect the market, for better or for worse.

Interestingly, forecasters predict a bumper year for bank profits, with a record-topping £40.5 billion generated. The crunch has already decimated banking stock prices, which has boosted share yields no end. If dividends aren't slashed, with banking share yields more than double the FTSE 100 average, we might see a resurgence of investor interest leading the index up.

But the flipside is that exposure to the sub-prime credit crisis could see banks writing down as much as £15 billion of bad debt. The G7 expect global losses to top £200 billion. While the banks seem to be making good money in general, are their shares going to rebound at a time when they are forced to lop off huge tranches of worthless assets from their balance sheets?

The banks' results may well move the markets more than other news because the recent problems all stem from a financial crisis. But this story has reached an interesting stage - everyone expected this crisis to spill over in to the wider economy but it isn't clear just how much it has or will. Employment, trade balance and confidence data this week will give the markets some insight into this conundrum, on both sides of the Atlantic.

A ray of sunshine is that the G7 now think that the US economy will avoid a recession. The Fed may have done enough to get off the hook, but who knows what problems its slash-happy rates policy will store up for the future? Careful and cautious, the Bank of England has to walk the tight rope between stimulating the economy and boosting inflation. Time will tell which economy fares better.

Will the banks bounce back? Or will they lead equities down to the briny depths? Take a view as the story unfolds at ChoiceOdds.com - where you can bank on the excitement of short term market bets all day long.

The FTSE shed 245.2 ticks last week, reversing the 160.2 tick gain of the week before. That makes 5 out of 6 weeks this year when the index has fallen.

Another woeful week for the DAX saw it lose 2.89% of its value. It now stands down 16.12% since the start of the year.

The DOW continues to jump about, last week surrendering 4.4% of its value - the same percentage it gained in a rapid rally the week before.

The population of London was 1,829 in 2005 - that's London, Christmas Island. The island was the base for Britain's thermonuclear weapon tests in the 1950s, codenamed Operation Grapple.

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