Markets can’t get over Europe
by Peter Switzer
It’s going to take some time before investors — and especially the ones who can take markets up or down — will get past the opportunities and threats of Europe. And so overnight new European concerns drove stocks down but who knows what will happen tomorrow?
Watching stocks has become like the Tour de France where you have your money on a guy who can’t match it with the sprinters in the early stages but he will let it rip in the mountains stage.
The latest worry was Italy and whether it will really implement austerity measures, and contagion concerns were put out there as another reason to be wary of stocks.
The Dow finished down 74.7 points, or 0.61 per cent, to finish at 12,078.98.
Meanwhile, the S&P 500 lost 12.07 points, or 0.95 per cent, to end at 1251.78.
In developments from the continent:
- The German Chancellor Angela Merkel's ruling Christian Democrats Union party gave the nod to the idea of some countries leaving the eurozone. So they could be in the EU but be on their own currency.
- Mario Monti, Italy’s new leader, will head up a ‘government’ of non-politicians, as CNBC puts it, and so experts in their fields will be recruited to put the austerity measures in place ahead of an election in 2013!
- Also, the new Greek Prime Minister Lucas Papademos faces a confidence vote on Wednesday
- Italian debt on the most recent auction of two-year bonds came in at a high 6.29 per cent, which is too high to be sustained.
- The failure of leadership on solving Italy’s debt predicament is breeding negativity about how long Europe will be teetering on the brink of recession and a eurozone break-up.
- Spanish yields on 10-year bonds are starting to climb worryingly high.
Chief economist, Michael Knox of RBS Morgans, believes that the European Central Bank holds the key and until it acts decisively there won’t be any substantial change to the one day up, one day down outcomes for the equity markets.
US market positive
One thing that should be remembered is despite this negativity over 2011, the Dow is still in positive territory, which is unbelievably good considering how bad the news has been.
Imagine if the news out of Europe could raise confidence levels?
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Published on: Tuesday, November 15, 2011
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