Investors concerns over the economies of both the US and Europe helped push stocks lower in Asian trading this morning. Following on from the fall yesterday sparked by Fed Chairman Ben Bernanke’s signaling economic stimulus would not be required for the slow moving US economy, Stocks continued to decline seeing the Nikkei 225 reach a 4 week low. The US economy was showing signs of stalling with a succession of weak housing data released in the world’s largest economy, which fueled speculation of a change in monetary policy by the Fed Reserve who have pledged to keep interest rates at their record low for the next two years.
A worse than expected debt auction held by Spain renewed Eurozone fears after a lull in news from Europe over the last week or so. Spain had hoped to auction off nearly 3.5bn euros of medium-term bonds, however, Spain which is showing record unemployment figures, only managed to sell off 2.6bn euros worth of bonds. To further worsen the Spanish situation, the yields on 10 year Spanish bonds already circulating increased by 0.25 % to 5.7%, the highest it has been since January 2012.
The decline in confidence for a global economic recovery saw Asian investors abandon stocks in droves. The Nikkei 225 of Japan was down 0.53%, trading at 9767.71, having broken the big psychological 10,000 barrier. The US 30 was down 0.95%, valued at 13074.75 whilst Hong Kong’s Hang Seng Index dropped 0.7% and Australia’s ASX/200 Index closed 0.35% lower.
Today 12pm – GBP – interest rate decision in the UK and 1.30pm GMT – USD – Initial jobless claims released. Both of which should cause market volatility, especially in the GBP/USD pairing
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