Germany’s announcement that it is to ban short selling continues to undermine market confidence in the afternoon session.
The announcement had sent the Euro to four-year lows against the Dollar yesterday and created an aura of aversion to the purchase of Eurozone debt. Speculation is rife that this out-of-the-blue interference has been triggered by regional stresses known to regulatory bodies and not to investors.
As the news continued to affect today’s trading, France, Sweden and the Netherlands criticised the unilateral move, with French Finance Minister Christine Lagarde ruling out anything similar.
While it may seem that the Eurozone is lurching from crisis to crisis, Goldman Sachs chief global economist Jim O’Neil added a note of caution to reactionary responses, commenting: ‘People need to remember that for the past couple of years the Euro’s been very expensive’ before adding that ’something needs to be done by European policy makers to stabilise the Euro in the near future’. [1]
The Euro has, however, managed to pick itself off the ground this afternoon as investors wait to see whether the European Central Bank will make an announcement outlining steps to curb the debt crisis.
Staying with forex markets, Sterling has extended its weakness against the US Dollar for the sixth day running. This selling follows concerns over any fiscal tightening measures from a Conservative government and the release of MPC minutes showing a unanimous decision to leave interest rates unchanged.
Looking at the UK market there are very few winners. United Utilities (+0.28%) leads the pack following the appointment of Russ Houlden as its new chief financial officer, followed by grocer Tesco (+0.22%) and Experian (+0.08%).
Experian’s gains came off the back of preliminary results ahead of expectations, alongside the credit checker managing to cut its year-on-year debt from $2.1 billion to $1.6 billion.
Leading the losers is Home Retail Group. The owner of Argos and Homebase saw its price fall as its shares went ex-dividend, compounded by UBS downgrading the retailer’s rating to neutral as fears gather that a VAT rise will affect consumer spending power.
Miners continued to be heavily affected by the continuing Eurozone situation: Xstrata (-5.91%), Rio Tinto (-5.55%) and Kazakhmys (-4.84%) all experienced heavy losses. The FTSE 100 was trading at 5170 (-2.6%) at 15.30 (London time).
As the American markets open we are seeing losses across the board, with the Dow Jones down 105 points (-1.99%), Nasdaq falling 11 points (-0.50%) and the S&P 500 down 6.40 points (-0.57%).
Source: [1] Bloomberg (19 May 2010)
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'Spread Betting News 19 May 2010', Article by IG Index, last update: 19-May-10
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