Pessimism was seen across the broad markets today after Standard & Poor’s warned it might downgrade 15 European nations including Germany and France, spreading concerns in markets and boosting demand for lower yielding assets.
If European leaders will fail to decide on a credible plan during Friday’s summit that would solve the region’s debt crisis, six nations might lose their AAA credit ratings, spreading pessimism over the outlook of the European economy.
This ended the rally seen since last week in the global equity markets, as risk aversion increased demand on safe haven. Investors must be cautious over the coming period ahead of the ECB meeting and the EU summit later this week.
As uncertainty continues to surround the outlook of the European debt crisis the Australian central bank cut its interest rate by 25 basis points to 4.25% to sustain growth, signaling that Europe’s efforts to end the debt crisis are still not enough.
We expect markets to remain under pressure since more pessimism might be spread among traders ahead of the ECB’s meeting and EU’s summit. US lack the economic data today. While in Europe the GDP was unrevised at 0.2% in Q3.
In Asia stocks fell as the regions is facing “much greater downside risks”, and Nikkei 225 ended lower 1.39%, while Hang Seng closed 1.24% down. InEurope, FTSE 100 fell 0.23% while DAX fell 1.09%.
The euro is trading with some bearish momentum around the 1.3390 level, while the pound is hovering around the 1.5650 as of this writing. The USD is almost unchanged around the 78.55 level. The yen is rising trading around 77.65.
Oil is almost unchanged trading around $100.88 on the euro zone downgrade risks, while gold is trading around $1719.50. The AUD fell today trading around 1.0225 after the RBA lowered rates to 4.25%.
Originally posted here
