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


While you were sleeping: Debt doom & gloom persists

While you were sleeping: Debt doom & gloom persists

(BusinessDesk) August 11 - Equities on Wall Street and in Europe swooned amid rumours that a downgrade of France’s AAA credit rating was imminent and concern persisted that the debt crisis had yet to run its course.

While Standard & Poor’s, Moody’s Investors Service and Fitch Ratings all affirmed France’s top credit rating, banks tumbled on both sides of the Atlantic. Societe Generale SA dropped 15%, even as France’s No. 2 lender denied speculation of trouble.

The Stoxx Europe 600 Index closed with a 3.8% drop for the day.

In late trading, the Dow Jones industrial average dropped 1.72%, the Standard & Poor's 500 Index shed 1.31% while the Nasdaq Composite Index fell 1.06%.

Financial stocks on Wall Street suffered along with their European counterparts, with the KBW bank index shedding 6%.

"You've already had situations in Greece, Spain has been in there, Portugal, and now if you are talking about France, which because it's a bigger economy, it probably generates more concern on a comparison basis," Gordon Charlop, managing director of Rosenblatt Securities in New York, told Reuters.

"So there are investors who are a little bit more cautious about European financials and that translates into financials here."

Wall Street’s so-called fear gauge, the CBOE Volatility Index, was last up 8.5% at 38.04, after climbing as high as 44.41 earlier in the session.

Economic fears are weighing heavily on Americans, with a large majority saying the United States is on the wrong track and nearly half believing the worst is yet to come, a Reuters/Ipsos poll said on Wednesday.

The poll reflected growing anxiety about the economy and frustration with Washington after a narrowly averted government default last week, a credit rating downgrade by Standard & Poor's, a stock market dive and a stubbornly high 9.1% jobless rate, according to Reuters.

A worsening economic outlook is considered bad news for companies that depend on discretionary spending. Entertainment company Walt Disney Co shed more than 9%.

Even companies whose fortunes aren’t necessarily tied to the economy are suffering. EON AG plunged after Germany’s biggest utility announced plans to cut more than 10% of its workforce.

In this climate it is easy for gold to sustain its rapid ascent to fresh records.

“Gold will continue to appreciate until there is a fundamental shift in the government policies.” James Dailey, who manages US$185 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania told Bloomberg News.

Gold futures for December delivery were 2.5% higher at US$1,786.80 at 12.34pm on the Comex in New York, after hitting a record US$1,801 earlier today.

Bank of America Merrill Lynch, in a report dated yesterday, raised its 12-month gold-price forecast to US$2,000 on the increased chance for another round of U.S. asset purchases, known as quantitative easing, Bloomberg reported.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>

Commerce Commission: Cartel Conduct Now Punishable By Up To 7 Years’ Jail Time

Cartel conduct can now be punished with a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect today. Cartel conduct includes price fixing, market allocation and bid rigging (see ... More>>

Stats NZ: Auckland Population May Hit 2 Million In Early 2030s

Auckland’s population may rise from about 1.7 million currently to 2 million by early next decade, Stats NZ said today. “Auckland will likely have the highest average annual growth of New Zealand’s 16 regions over the next 30 years, from ... More>>

Air New Zealand: Business Travellers Return To The Skies In Record Numbers

After a year of talking to a computer, Kiwis are leaving the office to re-connect with their clients, suppliers, and staff. New figures released by Air New Zealand show domestic business and corporate travel has defied global trends by returning ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>

LPG Association: Renewable LPG Achieves Emissions Budgets With No Need To Ban New LPG Connections

Renewable LPG can supply New Zealand’s LPG needs and achieve the emissions reductions proposed by the Climate Commission without the need to ban new connections, a new study shows. The investigation, by leading consultancy Worley, was prepared for the ... More>>

Commerce: House Values Continue To Climb As New Government Measures Announced

The Government’s new initiatives to quell the rocketing housing market were announced last week, just as house prices hit a new high for the end of March. The average value increased 7.8% nationally over the past three-month period, up from the 6.8% ... More>>