Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Extent of European market moves indicate real concern

10.05 AEDT, Tuesday 5 February 2013

Extent of European market moves indicate real concern
By Ric Spooner (Chief Market Analyst, CMC Markets)

For the first time this year, the local market opening will follow a significant decline in international markets. Allegations of improper payments to members of Spain’s governing party were the catalyst.

Last night’s developments create a dilemma for investors. On the one hand, they will be conscious of that this news comes after a protracted market rally. In these circumstances, bad news is always likely to trigger a sharp initial reaction as nervous traders rush to protect significant profits. In the longer term, investor action will be limited by the fact that the allegations are at this stage unproven. Even so, markets will monitor this situation closely over the coming days and weeks. If they have any substance, this type of political allegation tends to unfold over a period of time as the media and opposing political parties gradually uncover more facts.

On the other hand, until there is news putting this issue to rest, it is likely to be a source of concern to markets. Ultimately the possibility of a Spanish election could at this stage lead to significant destabilisation of the delicate Eurozone reform alliance. The implications of this risk are reflected in the size of moves in directly affected markets last night, with Spanish 10 year bond yields jumping 0.23% overnight.

The Reserve Bank is unlikely to cut rates or indicate a heightened easing bias today. A wait and see attitude seems likely given the improving international economic outlook, rising asset prices and higher iron ore prices. A decision along these lines is unlikely to have any impact on markets this afternoon.

http://www.cmcmarkets.com/


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news