Galvan Research -- CFD Advisory Broker -- Market Outlook for 2011

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Galvan Research and Trading, the UK’s leading CFD (contracts for difference) advisor, reviews the market outlook for CFD investors in 2011.

We are seeing strong demand for our CFD advisory service. Equities and Commodities remain popular asset classes with investors. CFDs provide investors with easy access to both.

2011 Market Outlook for CFD Investors

The job of central banks won’t be so easy in 2011. China, the work shop of the world, is already tightening interest rates as its strong economy is pushing up prices and wages. The Western World, including the UK, is also starting to see signs of rising inflation. So the Bank of England will be under pressure to raise rates this year.

The key question for CFD investors in 2011 is whether we will face mild or extreme inflation. According to JP Morgan, mild inflation is good for stock markets. In a study looking at returns from the S&P 500 since 1872, they note stocks performed well when inflation was in the -3 per cent to 3 per cent range. But at the extremes, high inflation or deflation, stocks tended to perform poorly.

Another factor for CFD investors to consider in 2011 is that we are in the third year of the US Presidential Cycle. The US presidential election cycle has had a strong historical relationship with stock markets. According to stock market historian David Schwartz, UK shares rose 15 times in a row in the past six decades. The explanation for this statistical anomaly is US presidents attempt to stimulate the US economy in the lead up to re-election, which gives stock markets a lift.

Andrew Gibson, Head of Research at Galvan: “Overall, we are bullish for 2011. The global economy is recovering, takeover activity is rising and corporate profit growth continues to be strong.
Sure, there are plenty of things to worry the stock market – rising inflation, a collapse of the Euro, austerity budgets, protectionism. But we are always mindful of the old expression - markets rise on a wall of worry. In other words, the time to worry is when there’s nothing to worry about.”

Strong Demand for CFD Advisory Service
While investor confidence seems to improving, many investors are finding it difficult to know where to invest their capital. Cash and Bonds offer very low yields and Property is still fragile given the tight lending conditions.

Andrew Gibson, Head of Research at Galvan: “We are seeing strong demand for our CFD advisory service. Equities and Commodities remain popular asset classes with investors. CFDs provide investors with easy access to both.”

About CFDs

A CFD is a contract to exchange the difference between the opening and closing prices of a specified financial instrument, including shares or commodities. A CFD does not carry votes like ordinary stock, but enables investors to gain economic exposure to a listed company for a fraction of the cost of buying shares.

Galvan Research
Galvan Research and Trading Limited is Authorised and Regulated by the Financial Services Authority to provide investment advice to private investors. The company has won many awards including Best Equity Derivatives Advisor at the prestigious Shares Awards for five successive years. Galvan looks after private individuals who seek to grow their investments.

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Nick Parritt