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Markets plummet on Spanish debt concerns

After a few quite weeks on the European front, sovereign debt issues were once again thrust into the limelight. Just a day ahead of a Trokia visit to Greece which is anticipated to show missed fiscal targets, a second indebted region of Spain, Murcia, applied for financial assistance from the central government. Investor’s concerns continued to grow that Spain may need a full sovereign bailout and shares reacted dramatically, falling heavily on Monday morning. Amid the red was the FTSE100 which quickly traded down close to 2%, with a similar fall seen on the DAX. The Spanish Ibex was however the biggest faller, down as much as 5.34% with 10-year borrowing costs reaching 7.59%, which is regarded as an unsustainable level in the long term.

While Spanish bond yields are hitting their euro-era high also the shared currency is weakened by Spanish woes and hits his 11-year low against the Japanese yen, falling to 94.37 yen in Asian trade and a new two-year low against the Dollar, trading at $1.2084.

The worries about Spain spread across the Atlantic, dramatically reducing global Stock markets from their recent highs. The Dow Jones was down around 220 points (1.7%) just as the NASDAQ, having fallen 72, 12 points (2.46%) in the first 10 minutes of trading (14:40pm London time). Contagion from the euro-zone affected the Asian markets overnight, with many of their economies geared to exporting to Europe from there is growing evidence of declining demand. Hong Kong’s Hang Seng Index (HSI) tumbled 3% with Japan’s Nikkei 225 plunged 1.9% last night.

In a scene rarely if ever seen by the younger members of staff in the office, not one constituent of the FTSE 100 finished in positive territory. The index, weighed down by financials and miners, lost 118 points (2.1%), with the German and French indices closing close to 3% lower. In a remarkable turnaround, the Spanish IBEX closed down a mere 1.1%, impressive given that it was down around 6% at midday and possibly attributable to a short selling ban in Spain and Italy.

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

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