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Stockmarkets: “Meltdown Avoided”

  • August 26th, 2007
  • Posted by EUEditor

euro-symbol-reduced5.jpgEuropean share markets ended the last week up, participating in widespread recovery from the falls earlier this month, brought on by troubles with home lending in America.

The upward trend continued through to and including Friday (24.8.07), except for Frankfurt, which was affected on the day by a drop in the price of shares in the travel firm TUI.

It was marked by continuing uneasiness in many quarters; competing with comments that the recent falls had been incongruous when set against generally strong economic conditions.

The Financial Times “Global Overview” maintained the note of caution:

“Calmer conditions returned to financial markets this week as the prospect of further action by the Federal Reserve alleviated the worst of the recent anxiety.

“News of a huge investment by Bank of America in ailing US mortgage lender Countrywide Financial and further evidence of the willingness of central banks to inject funds into the financial system further bolstered sentiment.

” ‘The turnaround in market sentiment since the Fed’s discount rate cut on 17th August and the additional injections of liquidity from the European Central Bank have taken major equity indices back to levels which are only a little lower than they were at the start of the month,’ noted Julian Jessop at Capital Economics.

” ‘Meltdown has been avoided.’

“But the underlying picture remained one of uncertainty as money market conditions remained extremely tight and investors began to ponder the likely impact of the turmoil on the wider economy.”

Reference:

See EUAustralia Online 11, 15, 18.8.07

Dave Shellock, “Global Overview: Fed helps restore calm”, Financial Times, 24.8.07. http://www.ft.com/ (25.8.07)

BBC, Market Data, 26.8.07. http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/overview/default.stm (25.8.07)

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