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

 

Tax: GST Threshold For Online Purchases Won't Lower Before 2018

The government wants to lower the threshold on online purchases which qualify for GST from mid-2018, but says more work is needed and there will be no change without public consultation. More>>

ALSO:

North Canterbury: Government Extends Drought Classification

The government has extended a drought classification for the eastern South Island until the end of the year, meaning the area will have officially been in drought for almost two years, the longest period for such a category. More>>

ALSO:

Negotiations Fail: Christchurch Convention Centre Build To Proceed Without PCNZ

After protracted negotiations, the government has ditched the construction consortium it picked to build Christchurch's replacement convention centre, which it now anticipates delivering at least two years behind the original schedule. More>>

ALSO:

Ruataniwha: Greenpeace Launches Legal Challenge Against $1b Dam Plan

Greenpeace NZ is launching a legal challenge against a controversial plan to build a dam that’s set to cost close to $1 billion and will pollute a region’s rivers. More>>

ALSO:

Inequality: Top 10% Of Housholds Have Half Of Total Net Worth

The average New Zealand household was worth $289,000 in the year to June 2015, Statistics New Zealand said today. However wealth was not evenly distributed, with the top 10 percent accounting for around half of total wealth. In contrast, the bottom 40 percent held 3 percent of total wealth. More>>

ALSO:

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news