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Markets Panic On Continuing EU Indecisiveness- Latest Market Analysis

An overnight recovery in US stocks which eventually closed marginally higher after London’s previous close, may have led investors to believe Thursday morning would offer some respite from the continual declines seen over the last week. They would have been wrong.

Equities almost instantly started trading slightly lower, but worse was to come, as indices gradually declined further with each passing hour. As the US reopened it too returned to negative territory and European markets were all trading around 2% down.

Once again European debt issues were in focus, as doubts mounted about the EU’s willingness to really tackle the Italian and Spanish government bond markets. Rumours of token gesture buying of Portuguese and Irish debt did little to improve the mood which was further dented when ECB president Jean-Claude Trichet stated that individual EU nations were responsible for their own fiscal positions. Those comments failed to inspire observers that had been hoping to hear his support for the likes of Spain and Italy, and his use of riddles to answer whether the ECB was buying bonds failed to convince the market it was doing anything meaningful.

Traders continued the indiscriminate selling of stocks that escalated throughout the day, as fear grew that the lack of confidence seen in financial markets at present would feed through to a similar lack of confidence at a global corporate level.

In the UK 34 different FTSE 100 companies posted 5% plus declines, as the blue chip index itself suffered a brutal 3.4% fall to close 191 points lower at 5393. Amongst those were Lloyds Banking Group and Inmarsat after disappointing results, whilst many of the bellwether mining stocks were also in the 5% club. The FTSE itself has lost over 9% in just under two weeks.

This was posted in Bdaily's Members' News section by John Dance .