Wary of Spain and Greek debt


Demonstrations in Athens and Madrid ended in bloody clashes between protesters and riot police as uncertainty over a bailout for Spain and European leaders struggling to find a unified position to tackle the Euro debt crisis, continue to dominate news and market sentiments. EURO/USD stays at the same level at 1.2877 as Wednesday morning.  Dow Jones and Nasdaq fell on uncertainty over Europe while Asian stocks rebounded on Thursday. The MSCI-index for the South Asian Pacific state traded up 0,5 %. The Shanghai composite index fell to its lowest level since February on the possible negative impact of the economic slowdown on corporate earnings.

Oil prices are under pressure with Brent crude clinging to the 110 USD a barrel. In his speech to the UN General Assembly the Iranian president, Ahmadinejad, stroke a more conciliatory tone towards Israel dampening the war rhetoric.  Amadinejad called for a new world order not dominated by Western powers and stated that Iran was under constant threat of military action from what he called “uncivilized Zionists”. Precious metals are as commodity prices steady.  Gold is trading at 1755 and silver at 34.00 in early Asian trading.

As protesters against severe austerity measures took to the streets and clashed with police in Spain and Greece, European equities saw their worst day in two months.  Spanish 10-year bond yields rose to above 6 percent for the first since the European Central Bank, ECB, for two weeks ago introduced its scheme for buying bonds from exposed and struggling Euro-countries as Italy and Spain. This plan has trimmed borrowing costs for the last two weeks, but the effect of the monetary stimulus seems to be running out of steam faced with grim global economic fundamentals and realities.

The Japanese yen is keeping strong against both USD and Euro.  USD/JPY is trading at 77.66. The dollar index, DXY, measured against a basket of currencies eased 0,1 %, off a two week high on 80,012 reached yesterday.  A weaker dollar helped a modest recovery in dollar-denominated industrial commodities and helped copper, oil and gold from falling further.

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