A nervous morning has dawned in London, with the FTSE firmly in the red as UK spread betting investors await the results of an Italian bond auction.
The rout in Spanish bonds continues relentlessly, as Madrid’s borrowing costs move ever higher and ever closer to the dangerous 7% level.
The Spanish bank rescue was a flop by Monday afternoon, and now it’s turning from tragedy to something akin to farce.
Moody’s stuck the boot in late last night, downgrading Spain’s sovereign debt rating to just one notch above junk level, and expectations are building that Madrid will need yet more cash in the near future.
Meanwhile Italy will auction off up to €4.5 billion in shorter-term notes this morning.
Bond spread betting investors will be watching keenly to see if yields for this debt rise in a similar fashion to the increase seen in 10-year Italian bonds.
Spain and Italy might not be Greece, but neither are they Germany. Everyone is rightly worried that both nations are headed towards bailouts of the kind seen in Greece and elsewhere.
In corporate news, luxury fashion retailer Mulberry is being hit hard this morning, down 22% after it failed to meet the high expectations for its full-year figures.
At around £15 per share this morning, the fall from its 2012 high of near £25 has been precipitous, but then so was its ascendance from just 70p/share back in 2009.
Looking to the US, futures currently signal a quiet open for Wall Street but much could change once the Italian bond results emerge.
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Financial Market Comments from Chris Beauchamp, Market Analyst, IG Index.
The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.
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