UK markets slumped yesterday, after Moody’s Investors Service placed Eurozone countries under review citing doubts over the success of the recent summit aimed to resolve the European debt crisis, dampening investors’ sentiment.
Lloyds Banking Group, the top laggard on the FTSE 100 index, declined 8.6%, while Barclays shed 4.6%, amid renewed worries over the Eurozone debt crisis.
Royal Bank of Scotland Group slipped 6.5%, after the UK Financial Services Authority report revealed reasons for the near-collapse of the bank in 2008.
Among mining sector stocks, Xstrata, Antofagasta and Kazakhmys retreated between 5.6% and 6.7%, amid speculation that a slowdown in China’s industrial output would decrease demand for copper.
ENRC dropped 7.4%, amid speculation that Britain's Serious Fraud Office has launched a formal corruption investigation into the company.
FTSE 100 slumped 1.8% to 5,427.9, while FTSE 250 tumbled 2.3% to close at 9,901.2.
European Trading Review
European markets ended sharply lower yesterday, as Moody’s Investors Service signalled that it would review the credit ratings of all European countries. This came following last week’s debt summit and after Bundesbank President, Jens Weidmann, rejected the idea of using ECB to bail out governments.
Insurers, Assicurazioni Generali, Allianz and Axa, plummeted between 3.9% and 6.5%, after S&P placed the institutions on negative watch list.
ING Group sank 8.1%, after the company offered to buy back and exchange subordinated debt to boost its capital reserves.
Utilities, EON and RWE, fell 4.6% and 4.3%, respectively, after Bank of America Merrill Lynch downgraded the former to “Neutral” from “Buy”.
Infineon, lost 2.4%, after its US peer, Intel, trimmed its fourth-quarter earnings expectation.
FTSEurofirst 300 index dropped 1.9% to 967.5. German DAX Xetra 30 fell 3.4% to 5,785.4. French CAC-40 fell 2.6% to 3,089.6.
US Trading Review
US markets tumbled yesterday, after comments from Moody’s Investors Service and Fitch Ratings dampened investors’ optimism about the European leaders’ ability to devise a comprehensive solution to contain the region’s debt crisis.
Bank of America, the top laggard on the DJIA index, lost 4.7%, while JPMorgan Chase, Citigroup and Morgan Stanley shed between 3.4% and 6.1%, amid concern that the European debt crisis would spread.
Intel sank 4.0%, after it trimmed its fourth-quarter revenue forecast, citing supply shortages of hard-disk.
Alpha Natural Resources lost 8.8%, and emerged as the top decliner on the S&P 500 index, while Newmont Mining, Alcoa and Alcoa skidded between 2.5% and 4.5%, as base metal prices retreated.
Salesforce.com tumbled 6.3%, after a broker cut its recommendation on the stock to “Underperform” from “Neutral”.
DJIA declined 1.3% to 12,021.4. NASDAQ lost 1.3% to settle at 2,612.3. S&P 500 slumped 1.5% to 1,236.5.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.2% higher against the USD at $1.5614, marginally lower against the EUR at €1.1830, and 0.1% higher against the JPY at ¥121.57.
The EUR is trading 0.3% higher against the USD at $1.3198. The EUR is trading 0.1% higher against the JPY at ¥102.76.
Greece is scheduled to sell £1.25 billion of six month bills, while Spain would auction 12 and 18 month debt today. The Federal Reserve will also hold its final policy meeting of the year, later today, but is not expected to announce any policy measures. Markets also await data on German investor sentiment and US retail sales.
The AUD/USD is trading lower as increased risk aversion hurt commodity linked currencies. A National Australia Bank survey indicated that Australian business confidence remained unchanged in November.
The NZD is trading steady against the USD after Auckland-based Fonterra Cooperative Group, raised its milk payout forecast to farmers for the year through May.
Yesterday, the EUR closed lower against the USD, after Moody’s Investors Service announced that it would review the credit ratings of European Union member states after last week’s summit, increasing demand for safer assets.
The USD closed higher against most of its major peers, amid renewed concerns that European policymakers were not doing enough to stem the region’s sovereign-debt crisis, dampened demand for riskier assets.
The CHF closed lower against the EUR, amid speculation that the Swiss National Bank would weaken the currency at its quarterly policy meeting on 15 December.
Commodities Trading Review
In Asia, crude oil for January delivery is trading 0.2% or $0.16 higher at $97.93 per barrel.
Yesterday, crude oil for January delivery declined 1.7% or $1.64 to settle at $97.77 per barrel. This came amid renewed concerns about the European debt crisis, after Moody’s Investors Service stated that it would review its ratings for countries in the European region. Additionally, a rise in dollar also weighed on crude oil prices.
Gold for immediate delivery is trading 0.6% lower today, at $1,655.42 per ounce.
Gold futures for February delivery fell 2.8% or $48.60 to end at $1,668.20 per ounce yesterday. This came as the dollar rose against the major currencies, decreasing the demand for the precious metal as a hedge against inflation.
Financial Trading News
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'Gold Spread Betting Market Falls as Rising Dollar Weakens Hedge Demand' edited by ETX Capital, updated 13-Dec-11
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