European indexes have closed in red zone again after Moody’s lower predictions about credit ratings of Germany and uncertainty about Spain , which have worsened investor sentiment, as stated by Aleksei Afanasiev, the head of Portfolio Investment Department of :
- Stoxx Europe 600 has dropped by 0.47 percent to 251 points.
“European markets understand that there are no short-term decisions,”the expert admitted.
“Decision-making process consists of two stages. Market stabilization is necessary for economic stability. The most optimistic scenario is the one with winning time for the situation to gradually improve,” he said.
Pressure on Spanish indexes has been lasting for 3 days at the time when other regional governmental authorities will ask for financial support from Madrid.
Yield of 10-year Spanish bonds has risen by another 8 basic points to 7.52 percent.
“The level of 7%, marked as “psychological barrier”, means that Spain is moving down,” said the expert, “financing above this level is very difficult. Recalling the situation with such countries as Ireland and Portugal , they should have been saved when their bond yield amounted to 7%. Consequently, Spain cannot stay in such condition for too long.”
He said that the decision can be taken in favour of Spain if basic rate of European Central Bank (ECB) is lowered.
Spanish IBEX 35 has dropped by 3.58 percent to 5956 points.
Except Germany, Investors Service Moody’s has also lowered to negative the credit rating forecast in the Netherlands and Luxembourg, referring to the fact that situation in eurozone is becoming more uncertain.
Optimistic news concerned production activity in China, which stated the 5-year peak cannot support European indexes.
German DAX 30 has dropped by 0.45 percent to 6390 points. SAP AG has proved its forecast for the end of 2012 after the announcement about 12% growth of profits during the second quarter.
London FTSE 100 has lost 0.63 percent, having dropped to 5499 points, and CAC 40 has dropped by 0.87 percent to 3075 points.
