Mixed Sentiments Dominate Markets, but Fears from the European Debt Crisis Persist

By FX Empire.com

Pessimism persisted in global financial markets, as investors remained worried over the outlook of the European debt crisis, where yields on European bonds continued to rise despite the ECB effort to ease tensions in markets by purchasing Italian, Spanish, and Portuguese bonds. Moreover, easing inflationary pressures in the United States, in addition to rising industrial production should have provided traders with reason for optimism, yet the grim outlook provided by the Bank of England diminished hopes over the outlook for global growth, and raised concerns over the health of the global economy.

Traders accordingly continued to target lower yielding assets, where risk aversion remained the dominant theme around global markets, as investors shunned risky assets on fears the European debt crisis is worsening.

The U.S. dollar was mixed against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 78.10, compared with the opening level at 78.25 and Tuesday’s closing at 77.63. The Euro rebounded to the upside against the Dollar, where the EUR/USD pair traded at $1.3537, compared with the opening level at $1.3504, the British Pound however fell against the Dollar, where the GBP/USD pair traded around $1.5786, compared with the opening level at $1.5802, and the U.S. dollar extended its drop against the Japanese Yen, where the USD/JPY pair was trading around 76.97, compared with the opening level at 77.08.

Stocks in the United States fell by opening on Wednesday, as the Dow Jones Industrial Average was down by nearly 0.60% to trade around 12,021, while the S&P 500 index was lower by nearly 0.555% to trade around 1250. European stock indexes were mixed before closing on Wednesday, where FTSE 100 was down by nearly 0.50% to trade at 5488 and the DAX was down by nearly 0.90% to close around 5878.

Gold prices fell on Wednesday to trade now around $1767 an ounce and crude oil prices surged above $100 to trade around $101 a barrel for the first time since June.

Originally posted here