The rally in stocks and indices came to an end by Asian trading as the market fears over Spain took over from the Spanish bailout inspired bounce. Growing investor sentiment that the 100 billion euro financial assistance package approved for Spain to bolster the country’s banking system is nothing more than a plastering over of the cracks caused global stocks to lose much of the ground gained yesterday. Hong Kong’s Hang Seng Index fell by 1.00%, Australia’s whilst Japan’s Nikkei 225 Index was down 1.47%, later to rally to just 0.83% down.
On Monday, Spanish bond yields increased to nearly 6.5%, whilst ten year Italian bond yields increased to 6.032%. Analysts said that this indicated there were worries about the countries’ finances despite the bailout of Spanish banks. Spain has now become the fourth Eurozone member to require bail out money and as the crisis spreads to the bigger countries such as Spain and Italy, there are growing concerns that the growth in the region may slow down even further.
The falls were not limited to just the stock markets. Oil prices fell further in Asian trading after falling in US trading sessions on Monday. Brent Crude fell nearly 1% in early trade to as low as $96.62 a barrel. US light crude fell $1.15 to $81.55 a barrel. It now stands at 82.18 a barrel, down 0.63%.
The morning offers traders’ possible volatility on the GBP as the UK publishes industrial and manufacturing figures. Later on, Bank of Japan Governor Masaaki Shirakawa is due to speak, and his comments will be closely followed for any indication possible monetary policy changes. However, prior to that binary traders should look to the U.S. here official data on import prices as well as a government report on the federal budget balance are all published.
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