Traders: Safety First

Traders choosing safety over high risk rewards

Traders choosing safety over high risk rewards

Yesterday’s losses on the stock markets took traders and many others by surprise. However, today London’s leading share price index managed to repair some of that damage sustained during the bloodbath on Monday, with traders taking complete advantage of the low prices on offer.

Recovered by 1%

The FTSE 100 dropped by 3.6% on Monday and they have recovered by 1%, a small gain in the £49b drop in the value of leading stocks.

During the current economic climate with recession, banking and eurozone debt all taking their toll traders are moving quickly from these riskier stocks to put their money into safe bets such as gold and the US dollar. Even traders are not falling for the high risk and high reward game at the moment, they would rather take the stress free route.

The banking sector has reacted well after being pummelled post US subprime mortgage-related lawsuit. Losses have been recovered with Lloyds Banking Group and Royal Bank of Scotland both up by 3%.

The other big player is the mining sector and a strong comeback has supported the market, despite the sector being heavily sold off in the days just passed. Gold increased in price coming ever closer to the $2,000 mark, rising to $1,920.

The reality is the volatility surrounding the market has not disappeared and it is expected that there will another day of volatile trading, with the anticipation of economic data being released from the US and UK.

Royal Bank of Scotland

Many traders were still digesting the second set of figures for eurozone growth which had come in at 0.2%.

During the Monday Royal Bank of Scotland which is supported by the taxpayer lost 12% from its price and as such it was singled out by a broker as the most vulnerable British target of claims made by US regulators over the subprime mortgage scandal that affected Fannie Mae and Freddie Mac.

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