Market jitters continue over debts
World markets remained unsettled today over whether Greece’s referendum decision was a huge miscalculation, while worries over Italy disturbed investors too.
The combination prevented stocks from recovering much of Tuesday’s hefty losses when investors fretted over a possible disorderly Greek debt default and even the country’s exit from the euro.
“Investors remain nervous about the potential fallout from Greece’s referendum,” said Sal Guatieri, an analyst at BMO Capital Markets.
In Europe, Britain’s FTSE 100 dropped 0.4% to 5,402, while Germany’s DAX rose 0.7% to 5,876. France’s CAC-40 rose 0.7% to 3,088.18.
Traders will have plenty of news to mull over the rest of the day although Europe’s debt crisis will remain the focal point. Some diversion may come from the latest policy statement from the US Federal Reserve and the ensuing press conference from its chairman Ben Bernanke.
Greek Prime Minister George Papandreou will be in the hot seat later when he will likely face a grilling from French President Nicolas Sarkozy and German Chancellor Angela Merkel about his surprise move to put the rescue package to a popular vote.
The Greek leader faces a confidence vote in Greek parliament on Friday. If he falls, the referendum would be off, and Greece would be headed to early elections.
Meanwhile, Italian Premier Silvio Berlusconi was locked in meetings with his finance minister hammering out measures to weather the crisis. A spike in Italian borrowing costs this week has heightened calls for Mr Berlusconi’s immediate resignation – a move the markets have been clamouring for ever since ratings agencies downgraded Italy’s sovereign debt rating citing a dysfunctional government.
Stocks have struggled since Mr Papandreou unexpectedly announced he would call a national vote on Europe’s latest plan, agreed only last Thursday. The euro has also faced big selling pressure this week.
Earlier, several key Asian indexes rebounded, with Hong Kong’s Hang Seng shooting up 1.9% to 19,733.71. But Japan’s Nikkei 225 index tumbled 2.2% to 8,640.42, its lowest close in three weeks.
