EU summit fears send markets lower
Global stocks and the euro fell on Monday as expectations of this week’s European summit wane. The European stock markets for example opened slightly lower fora third day: The FTSE 100 index in London had lost 0.8% in early trading to 5471.56, as had Germany’s Dax which declined by 1.5% to 6170.25 points.
Investors are skeptical that the June 28-29 European summit will yield a deal that might ease the European debt crisis. According to a Pre-summit document, prepared for the meeting in Brussels, European Leaders will set out in detail the four “pillars” required for a strong economic and monetary union. They are attempting to establish a banking union to try to instil confidence in the continents’ banking sector and to stem the flow of deposits. In addition, they plan to launch a new debt redemption fund, which should be allowed to offer capital directly to banks, said ECB’s Executive Board member Benoit Coeure.
As the replacement for the current temporary EFSF (European Financial Stability Facility) they plan the ESM (European stability mechanism), a permanent rescue fund for the euro-zone which will probably come into force next month.
Unfortunately, because of the hospitalization of the new Greek prime minister, who will miss the EU summit, it seems that the EU will probably not take any decisions on Greece.
Further, apart from the EU summit, news was also dominated by the formal request made by the Spanish government, which has asked for aid of up to €100bn to recapitalize its banks. However, as investors continue to worry that the nations’ banking problem will require a national bailout Spanish 10-year government yield is still up 7 basis points at 6.423%.
On the downside the company “Shire PLC” also formally known as an “investor’s darling”, had a bad news day. After a rival company received clearness to market a cheap generic version of its hyperactivity drug Adderal XR, company’s shares fell by 11%.
Also the FTSE 100 finished the day with a bad performance, fell by 1.15% at 5450.6, whereas the DAX closed marginally lower (2.1%) at 6132 points.
This was posted in Bdaily's Members' News section by James .