US markets dropped precipitously before climbing back slightly after news emerged that the Eurozone had cancelled an important meeting that was due to take place alongside tomorrow's summit.
The cautious atmosphere was not helped by a US consumer confidence reading which dropped to its lowest level since March 2009.
By 4pm (London time), the Dow Jones was down 0.66% at 11,804, while the S&P 500 had lost 1.1% to 1240.37. In London, the FTSE 100 turned sharply lower before recovering somewhat, and was down 0.7% at 5509.13.
Eurozone springs a surprise
A quiet day for spread betting markets was upended shortly after lunch as news spread that a meeting of EU finance ministers had been cancelled. The Polish finance minister (who chairs the ECOFIN meeting because Poland currently holds the rotating presidency of the EU) sent a letter suggesting that the meeting would have to be rescheduled since several issues were unresolved.
Although the really major decisions will need to be passed by heads of government anyway, last Sunday's summit specifically called for the ECOFIN meeting to finalise the work on the bank recapitalisation programme before the Wednesday meeting.
Whatever happens, it does not really bode well for tomorrow that an important meeting is already off the agenda. The EUR/USD spreads turned sharply lower following the news, along with major stock indices, but risky assets regained some of their ground as the knee-jerk panic effect wore off.
Still no improvement in US consumer confidence
Markets failed to recover all their losses as US consumer confidence dropped to its lowest level since March 2009. The reading hit 39.8, from a downwardly-revised 45.4, while economists had expected a figure of 46. The current conditions index was even worse, slumping to 26.3.
The news shows that US consumers, a crucial lynchpin of the global economy, remain decidedly unenthusiastic about spending their hard-earned cash. There was more negative news, with the Richmond Fed manufacturing index remaining unchanged at -6 in October. All in all, it still seems as if the US economy is struggling to make meaningful progress.
Market darling Netflix falls from grace
All is not well in Silicon Valley. Video-rental service Netflix, which enjoyed such a strong rally in its share price through 2010 and the first half of 2011, dived 36% to $76.91.
The company said that it lost 800,000 subscribers in the US during the third quarter of the year, as customers continued to desert the company following price increases and a failed plan to introduce separate services for DVDs and streaming.
The current share price is a far cry from the all-time high of $298.73, which it hit in July. Losses are now forecast for 2012 as a result of expansion plans for the British Isles, while further expansion is now off the cards until further notice.
Sales fall at Carpetright
Back in the UK, Carpetright managed to recover from its initial slump this morning to stand almost unchanged at 484.6p. The company reported a drop of 5.2% in second-quarter sales, with full-year pre-tax profit now expected to be towards the lower end of expectations.
Chairman Lord Harris of Peckham said that 'no respite from the challenging conditions' was to be expected. The company has closed 11 stores so far this year, and further cost cuts are expected.
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'EUR/USD Drop as EU Finance Ministers Cancel Eurozone Meeting', Article by IG Index, last update: 25-Oct-11
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