Banks rallied in spite of Moody’s downgrade
The action continued after the closing bell last night, as Moody’s announced it had downgraded 15 banks, including RBS, Barclays and HSBC, because of their susceptibility to global market volatility. It was particularly bad news for Credit Suisse; the only bank to be downgraded 3 notches causing their shares to be down 1.66% at the opening bell. Later in the day the downgrade was attacked by critics as backward looking with Paul Miller (FBR Capital Markets analyst) saying that the downgrades should have happened earlier. This resulted in the markets rallying together taking a surprising turn as stock ended UP at the closing bell, with HSBC gaining 0.44% over the course of the day.
News was also focused on the German Ifo Business Climate Index which rates the current business climate and measures expectations for the next 6 months, published by the Ifo Institute for Economic Research, fell to its lowest level since March 2010 to 105.3, down from 106.9. The Ifo-index consists of two Sub-indices, the German current Assessment Index and the German Business Expectation Index. Although the current Index slightly improved in June to 113.9, the Index on business expectations fell from 100.8 to 97.3. The decreasing confidence of business and shrinking indices show that even Europe’s Powerhouse is no longer resisting against the euro-zone debt crisis.
“The German economy is clearly slowing down and a contraction of the economy in the second quarter looks possible,” said Carsten Brzeski.
Neither the euro against the dollar nor Germany’s DAX (6,258.71, -1.33%) reacted much to the Ifo statement. Once again the FSTE 100 closed down by the end of the session, at 5,510.80 (-1.00%), but it’s not all bad news, as it has gained 0.6% over the course of the week.
This was posted in Bdaily's Members' News section by James .