Posts tagged Spain
Equity market update
Equity market indices witnessed the first weekly decline in 3 weeks. Sensex declined 0.6% for the week to close at 17460 against the last week’s close of 17574.
After last Friday’s decline, the week opened on a positive note but for the week hovered in a range. However bearish sentiments on the last two days took the indices in red.
Conference Board of US corrected its outlook for Chinese economy which led to about 3.36% decline in metal index. Moody’s Investor service placed Spain’s credit rating on review. There are concerns that country’s credit rating will be downgraded. US ISG Manufacturing Index showed a possible decline in manufcturing activity. These factors led to selling in the market.
On domestic front, Indian exports for the month of May grew at 35% which added to the positive sentiments. Banking shares, as expected, traded with negative sentiment due to rate hike concerns. Low weekly inflaton figures however, relieved some of those concerns and created positive sentiments.
Two big stories of the week, rate hike by RBI (read MB update here) and the US Non farm payrolls (which shows a loss in jobs) report came in after market hours and thus these are not factored in this week’s movement. Due to these factors, it is expected that markets would open weak on Monday but then will move in a rangebound manner.
Author:Praveen Bajaj
Greece Crisis: Is Spain the next Greece??
PIGS as the financial media call the four countries: Portugal, Italy, Greece and Spain are one of the biggest risks to the current global financial stability. When much of the attention is grabbed by the troubled Greece, the Spanish economy is in reality in a position worse than that of the Greece.
While other European nations like France and Germany — and even Britain — are beginning to show signs of economic growth, Spain remains stuck in recession. Spain is the only G20 country that remained in recession in 4Q of 2009 and the IMF forecasts that it will remain so till 2011.
Some of the most worry-some statistics from Spain, which clearly highlights the risks are:
- Unemployment of around 18% while the average for EU is only 9.5
- Although lower than average Debt to GDP ratio, it has doubled in last one year, etc
There are some noted economists who believe that it will take Spain 7-8 years running the same amount of deficits to become the next Greece, however others say that the crisis is much serious than it looks at the face.
Hence, I believe that Spain’s problems coupled with debt issues of other EU countries poses a serious threat to the financial markets. We can expect more sovereign rate cuts like what has happened to Portugal and Greece last Tuesday.
Author name: Rahul Sonthalia, Research Head, Kredent
