Wall Street opened quietly this afternoon, as a lack of US data coupled with nervousness about the Eurozone situation kept moves limited.
News that Brazil's economy has been hit hard by the Eurozone crisis added to the cautious atmosphere, as the summit in Europe this week gets closer by the hour.
By 3.15pm (London time), the Dow Jones was up 0.22% at 12,124.85, while the S&P 500 was down 1.19 points at 1255.89. In London, the FTSE 100 remained in positive territory, up just 4.5 points at 5572.44.
Effects of S&P decision continue to be felt
Events are moving fast in the Eurozone at the moment. Following on from S&P's decision to put almost the entire Eurozone on 'creditwatch', the agency has warned that it might take an axe to the rating of the European Financial Stability Fund (EFSF), the Eurozone’s rescue fund.
It said that such an action would be warranted if any of the guarantors of the fund (especially France and Germany) were themselves hit by a downgrade. At this rate, the only AAA-rated country left will be the UK.
Had S&P taken any of these actions a few months ago, the reaction might have been carnage in financial spread betting markets. However, the move is now being viewed as a useful spur to quarrelling Eurozone politicians ahead of their meeting on Friday.
Indeed, German finance minister Wolfgang Schaeuble has even said that the decision by S&P is an incentive for leaders to resolve the debt crisis, while Chancellor Merkel has dismissed the move entirely, saying 'what a rating agency does is its own responsibility'.
Eurozone crisis touches distant shores
The ripples created by the crisis in Europe have ramifications far beyond the shores of that embattled continent.
Figures from the Brazilian government, whose economy is the largest in Latin America, showed that Brazil did not enjoy any growth between the second and third quarters of this year.
Last year, by contrast, Brazil saw growth of 7.5%, putting developed nations to shame. Household consumption and capital spending were both hit, with all demand components contracting.
Central banks outside of the US and Europe have been steadily cutting rates in order to stimulate their economies.
The Australian central bank reduced rates once again this morning, a decision that had been widely expected, and caught only a few minor economists napping. Such moves underscore the point that the future of the global economy is highly dependent on the Eurozone, providing strong justification for this week's visit to Europe by US Treasury secretary Tim Geithner.
Dead cat bounce for Mouchel?
Support services firm Mouchel rose 9% to 10.24p (down 90% over the year) following news that it had appointed a new chairman.
David Shearer, described by Mouchel as a 'turnaround specialist', has grasped the poisoned chalice, saying that he looked forward to helping bring about a recovery for the besieged firm.
The company now has a market capitalisation of just £11.51 million, a world away from the £380 million price tag applied to it in 2009 when VT Group attempted to buy it. Several opportunities to sell the company have come and gone since then, and the outlook seems to offer no release for shareholders in the company.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
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'Dow Jones Spreads Rise Despite Nervousness Over Eurozone', Article by IG Index, last update: 6-Dec-11
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