MARKETS TODAY - Investors singled out Italy for more pain as they sent the interest rate on the all-important 10-year bond past 7% to hit 7.17%. The euro fell to €1.30 against the dollar, the lowest since January. French lenders Société Générale, BNP Paribas and Credit Agricole fell between 6.7% and 8% as rumours persisted that the extent of their bad loans to indebted eurozone countries would lead to France losing its AAA status within the next few days. Credit Agricole, which gave a second profits warning this year, said it would record a €2.5bn (£2.09bn) loss this year, chiefly due to writedowns in its investment banking unit, and it would not pay a dividend in order to retain capital. Analysts warned that Italy would be forced to turn to Brussels for bailout funds unless member states agreed a more coherent rescue package with more firepower to protect the currency union. An agreement last week to move towards greater harmonisation of fiscal rules initially pleased markets but in recent days investors have viewed the deal as weak and subject to wrangling and delay. A sense of confusion inside the eurozone was exacerbated after Angela Merkel, the German chancellor, renewed her opposition to expanding the bailout fund for the euro, insisting that €500bn was the limit. Merkel, speaking to the German parliament for the first time since the a package of measures was agreed in Brussels last week without the support of Britain, said the fund was capable of providing a firewall to protect indebted countries such as Italy, despite widespread concerns that the fund needs access to at least €2tn to reassure investors.
Access Investments-Building Awareness - European Union-ROMANIA
Thursday, December 15, 2011
Italy's crucial 10-year bond rate rises to 7.17%
MARKETS TODAY - Investors singled out Italy for more pain as they sent the interest rate on the all-important 10-year bond past 7% to hit 7.17%. The euro fell to €1.30 against the dollar, the lowest since January. French lenders Société Générale, BNP Paribas and Credit Agricole fell between 6.7% and 8% as rumours persisted that the extent of their bad loans to indebted eurozone countries would lead to France losing its AAA status within the next few days. Credit Agricole, which gave a second profits warning this year, said it would record a €2.5bn (£2.09bn) loss this year, chiefly due to writedowns in its investment banking unit, and it would not pay a dividend in order to retain capital. Analysts warned that Italy would be forced to turn to Brussels for bailout funds unless member states agreed a more coherent rescue package with more firepower to protect the currency union. An agreement last week to move towards greater harmonisation of fiscal rules initially pleased markets but in recent days investors have viewed the deal as weak and subject to wrangling and delay. A sense of confusion inside the eurozone was exacerbated after Angela Merkel, the German chancellor, renewed her opposition to expanding the bailout fund for the euro, insisting that €500bn was the limit. Merkel, speaking to the German parliament for the first time since the a package of measures was agreed in Brussels last week without the support of Britain, said the fund was capable of providing a firewall to protect indebted countries such as Italy, despite widespread concerns that the fund needs access to at least €2tn to reassure investors.
Subscribe to:
Post Comments (Atom)
3 comments:
Total unemployment is now higher than at any point during the recession causing industry experts to warn the private sector jobs market recovery has "stalled". In a series of grim figures delivering a pre-Christmas blow to the Government, the jobless toll for all age groups rose by 128,000 between August and October to 2.64m, the highest total since 1994. The unemployment rate was 8.3pc, up 0.4pc on the previous three months, said the Office for National Statistics. The number of women out of work surged by 45,000 on the quarter to reach 1.1m, the highest figure since 1988. The young were also badly hit with the number of 16 to 24 year-olds out of work reaching 1.026m between August and October - the highest since records began in 1992 and a rise of 54,000 on the previous quarter, the statistics out on Wednesday revealed. I absolutely do not make light of unemployment, as it is a very tough market everywhere except for teaching ESL. However, the recession of the 80s and early 90s was worse if you consider a smaller population at the time. The main difference now is that the world is more bureaucratic, so emigrating does not necessarily have the same escape quality as it did then. Everyone, please take stock of your friends by who is indebted and who is not. When someone is on the verge and if you have some money on hand, try to devise ways to buy things from them or increase their exposure to work opportunities. People whine about unemployment and while there is some truth to the facts that unemployment is a problem, how much of that problem stems from the unemployed being unable to get a job because they can not do what is required? Being qualified to do a job is a fairly simple idea. you are either qualified or not. Education is a necessity. If you have one, fine. If you do not, then you need to get one.
The biggest faller on the Dow Jones industrial average was industrial machine manufacturer Caterpillar.
Shares in Caterpillar, seen as a good measure of the health of the global economy, dropped by 4.4%. Bruce Bittles, chief investment strategist at Robert
W. Baird & Co, told Reuters tonight that US investors are growing more worried about the global economy's prospects in 2012:
There is a growing realization that the global economy is in jeopardy....Business is cooling everywhere. Right now, the US appears to be operating in a vacuum but that's not sustainable.
The euro plunged through the psychologically-important $1.30 level for the first time in almost a year, raising fears of another crisis less than a week after the last "make-or-break" European Union leaders' summit.
Equity, bond and commodity markets were rattled while the tensions were reflected at an Italian bond auction. Rome, where Mario Monti has already been forced to water down his "Save Italy" measures, had to offer 6.47pc yield to raise €3bn of five-year bonds - much higher than 6.29pc it paid two weeks ago.
Angus Campbell, head of sales at Capital Spreads, said: "Political leaders and central bankers seem to have got stuck in a quagmire of indecision so as a result financial markets gave up on their lack of resolve today...the prospect of a full-scale European sovereign debt melt down in the near future became more of a reality."
Post a Comment