April 28, 2010
‘‘It can really be summed up in one word -- contagion,’’ said CMC Markets analyst Michael Hewson.
The markets fell after Standard & Poor’s, a leading international ratings agency, downgraded Greek sovereign debt to junk status and cut Portugal’s long-term credit score by two notches.
The London stock market dived 2.61 per cent, the Frankfurt DAX sank 2.73 per cent and the CAC 40 in Paris plunged by 3.82 per cent.
The Lisbon stock market sank by 5.36 per cent and Athens plunged 6 per cent.
Wall Street was also sharply lower, with the Dow Jones industrial shedding 213.04 points, or 1.9 per cent, to close at 10,991.99. The Standard & Poor's 500 Index lost 28.34 points, or 2.34 per cent, to finish at 1183.71. The Nasdaq Composite Index fell 51.48 points, or 2.04 per cent, to wind up at at 2471.47.
Austock Securities senior client adviser and strategist Michael Heffernan said the lead from Wall Street and Europe was driving the losses, but Europe’s sovereign debt issues had minimal impact on Australian shares.
‘‘Its totally unsurprising we’re down given the lead from overseas,’’ he said.
‘‘The debt issues have absolutely zero effect here, frankly.
‘‘These ratings agencies are about six months behind the curve... so the fact that markets go down simply because credit ratings agencies have downgraded Greece and Portugal’s ratings is absolutely no reason at all why our banks and major resources should be down.’’
Wilson HTM head of private wealth management Derek Growns said that the jitters flowing out of Europe aren’t surprising because they’ve been coming for a while.
The issues surrounding sovereign debt will ultimately be sorted out in Europe. ‘‘But the countries involved - particularly Greek residents - are going to have to face up to the fact they have to cut spending and raise taxes.’’
http://www.brisbanetimes.com.au/business/markets/australian-stocks-in-tailspin-on-global-debt-fears-20100428-tqaj.html
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