European Indices Markets Struggle on Italian Ratings Downgrade
European equity markets have created a red backdrop for the FTSE, which is hanging onto positive territory.
At 10am (London time) the FTSE was up two points at 6485.
Once again the Dow closed at record highs, and it appears that we will need something extraordinary to halt this runaway juggernaut’s progress.
The confirmation that Fitch had downgraded Italy’s sovereign debt has prevented the European indices from following suit, but it appears that the FTSE is made of sterner stuff, as it is fractionally up on the day.
With none of the top-tier equities reporting figures, and a dearth of economic data, we could see traders twiddling their thumbs as they wait for US markets to open and drag us higher.
The banking sector is back under the microscope this morning, and the debate over the extent of segregation between the retail and investment arms continues.
Last week’s US banking stress test saw a lack of correlation between the results and the debt sector valuations of US firms, and it is likely that we will see a similar level of confusion in the UK banking sector today.
Overnight, inflation figures from China have confirmed that they are now running at a ten-month high of 3.2%, and this could stimulate a cooling of Asian export-driven equities.
There was encouraging news for International Consolidated Airlines, as the government-backed talks between Iberia and its staff reached an agreement.
However, Willie Walsh has far too much experience with British Airways to be fooled into thinking this has put an end to disruption.
As a result, we could well be seeing the calm before the storm of further cost-cutting measures.
Looking ahead to the US open, at 10am (London time) the Dow is being called to open 21 points lower at 14,376.
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Financial Market Comments from Alastair McCaig, Market Analyst, IG Index.
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