US and UK GDP Data Examined

Business & Finance

Government Officials, Businesses and Consumers Will Have Breathed a Sigh of Relief Last Week, When Data Was Released That Confirmed the UK’s Exit From Recession

LONDON–(Marketwire – October 31, 2012) –  The US followed suit on Friday and posted a 2% rise in GDP, compared to the UK’s 1%.

In the UK, the significant growth in GDP has been attributed to tourist events such as the Jubilee and Olympics, although the FTSE 100 index is still the worst performer out of 8 major equity indices and the only one not to hit a new high for the year.

It’s a similar story across the pond: whilst President Obama will be looking to focus on economic growth in the run up to the election, Mitt Romney believes that the economy is still moving too slowly.

Ashraf Laidi of City Index has commented that the UK GDP data exposes an economic gap filled in by one-off events like the Olympics, and notes that the “manufacturing and construction sectors remain in recession with PMI surveys below the 50.0 level.”

Trading after the GDP Reports

Here’s an example of how to spread bet following the GDP data releases.

In the light of the news, you might believe that the UK 100 will rise in line with the positive economic data. You’re confident that the market will rise and strengthen off the back of these reports, that you place a £10 long or buy position on the FTSE 100 index.

For every point the market moves above your entry point you stand to gain £10. If it moves 10 points in rising momentum for UK stocks, you’d stand to make £100 (£10 x 10pts).

However, if the market moves against you and falls below your entry point, you’d stand to lose £10 for every point it falls and potentially more than your initial deposit if you don’t utilise risk management tools such as guaranteed stop losses.

Ensure you fully understand the risks involved before opening a position.

Spread betting, CFDs and forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

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Joshua Raymond

City Index