Confusion Of The Trans-Atlantic Financial Markets …
- August 12th, 2011
- Posted by EUEditor
The second week of August , after commencing with a slump on stock markets, wild swings on markets, before ending with Friday rallies both in Europe and on Wall Street.
Uncertainty was blamed on the two persistent factors: the sovereign debt crisis in Europe, now affecting Italy and Spain, and slow economic recovery in the United States.
Asian markets shared in the general upsurge in princes on Friday, except for general sharp falls in Japan.
The week had seen gold prices surge, with some late easing, to end at $US1751.50 a troy ounce; other commodity prices continued lower.
Most analysts said: for the longer term, on stock markets, beginning next week, watch this space.
In the meantime, in Europe, regulators in Belgium, France, Italy and Spain imposed a ban on short selling of a range of stocks, reducing speculative pressure.
A strategic meeting was being prepared between President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany, to bring together proposals for handling the immediate financial situation, especially with Italy.
Better-than-expected unemployment figures in America at the week’s end contributed to a more relaxed mood there.
Said the Wall Street Journal at week’s end:
– European stocks push higher
– Bank issues gain following short-selling ban in parts of Europe
– But fundamental economic concerns remain and volatility will likely return
Reuters reported sceptical responses to the short-selling as a nostrum:
– Ban on financial stocks in France, Italy, Spain, Belgium begins Friday
– Bans imposed to deter rumours, level regulatory playing field
– Follows similar moves in UK, U.S. during 2008 crisis
– Bans largely ineffective – say industry, academics
Background on short selling: “In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to that third party. The short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as the seller will pay less to buy the assets than it received on selling them …†(Wikipedia)
Reference
Michele Maatouk and Ishaq Siddiqi, Dow Jones Newswires, “Global Markets: European Stocks Move Up Sharply; Banks Gainâ€, WSJ, NY, 12.8.11. http://online.wsj.com/article/BT-CO-20110812-706294.html, (12.8.11).
James Regan and Ian Simpson, “Short-selling ban spurs tentative recoveryâ€, Reuters, London, 12.8.11. http://www.reuters.com/article/2011/08/12/europe-banks-idUSL6E7JC0JD20110812, (12.8.11).
Wikipedia, SF, “Short (Finance)â€. http://en.wikipedia.org/wiki/Short_%28finance%29, (12.8.11).
Picture
Frankfurt stock exchange – financialtrade.info