LONDON, July 24, 2012 /PRNewswire/ --
In early morning trading on Monday, 23 July - the FTSE 100 was down 75 points as Spanish 10-year bond yields climbed over 7.51%.
As the UK index fell, investors going short and selling the FTSE 100 through a financial spread betting account with City Index would have profited.
Below, we look at the news out of Spain and how you can take a position on over 12,000 financial instruments with the potential to profit, regardless of whether they rise or fall.
Spanish Bond Yields Hit Record Highs
As fears escalated that Spain - one of Europe's biggest economies - might need a full national bailout, the yield on Spanish government 10-year bonds hit a new record of 7.51% on Monday, 23 July.
As the market opened on Monday, the FTSE 100 fell 1.5% to 5566 points, trading down 1.6% by 9:47 BST.
This reaction from the markets followed reports that Murcia had become the second indebted Spanish region after Valencia, in asking the government for financial support.
Joshua Raymond, Chief Market Strategist at City Index, stated in his daily Market Commentary: "The moves in Spanish bond yields over the last 48 hours of trading has been a big concern in the markets and a key catalyst for a bearish turn in equities that has seen the FTSE lose over 2.5% in the last two trading sessions."
He further adds: "There are fears that Spain is edging closer to being forced to seek a full scale bailout, having secured €100bn to help recapitalise its banks."
How to Profit from a Falling Index
With a financial spread betting account, you can take a position on a market with the potential to profit - regardless of whether it rises or falls.
Spread betting provider City Index enables its clients to take a position on over 12,000 financial instruments including major indices such as the FTSE 100.
Unlike those investors trading the FTSE 100 through more traditional channels, at a time such as this - spread betting the FTSE 100 could prove profitable.
When a market is set to fall, you can go short and sell the underlying market. In the event you are correct and the market moves in favour of your position, you will profit in line with every point that market falls.
Alternatively, if you believe a market will rise - you can go long and buy. Once again, if the market moves in favour of your position, you will profit in line with every point that market rises.
It is important to remember that if the market moves against your position, however, you can incur losses greater than your initial deposit (a small percentage of the total value of the underlying market).
Ensure you fully understand the risks involved and help limit your losses through a risk management strategy.
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If you found this article helpful, you may want to read more just like this. You can access a range of free spread betting tips, guides and articles through the City Index website.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.
SOURCE City Index