Date: 2010-05-17
Stocks and euro slip on austerity fears
LONDON - Stocks fell and the euro slumped to a four-year low on Monday as Asian markets caught up with Friday's sell-off in the West, shrugging off encouraging data and remaining fixated on troubles in the euro zone.
Shanghai stocks were down 5.07 percent, reflecting the negative mood across Asia, as investors worried that European austerity measures would stifle a recovery, affecting Asian exports to the West.
"It is probably a good excuse for a sell off," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin. "We have a recovery but it is a feeble one. If you load on to that recovery a severe dose of fiscal austerity, the prospects then for a sustainable recovery (are strained)."
The FTSEurofirst 300 index of top European shares opened down 0.43 percent, while core euro zone government bond futures opened nearly half a point higher as investors sought the safety of German paper.
On Sunday, German Chancellor Angela Merkel said that a $1 trillion EU/IMF bailout plan had only bought the euro zone time to tackle its fundamental problem -- a yawning gap between its strongest and weakest economies.
World stocks as measured by the MSCI All-Country index were down 1.07 percent whilst the more volatile emerging markets index .MSCIEF was down 2.46 percent.
Earlier in Japan, the Nikkei fell 2.17 percent to a 10-week closing low, mirroring falls in the rest of the region as investors ignored encouraging economic data from the United States, Japan and Singapore.
Exporters such as Canon Inc were hit as the low-yielding yen rose broadly, boosted by the rise in risk aversion, whilst China-linked shares such as Komatsu were clobbered by the fall in the Shanghai index.
The euro extended its losses to $1.228, down about 0.6 percent on the day, and over 14 percent lower year to date, making it the worst performing major currency.
"The euro is a one-way trade right now and capitulation is on my mind. I can see a move toward $1.2000 at least," said Kenneth Broux, market economist at Lloyds Banking Group.
Sterling slid to its lowest level since March 2009 at $1.4249 before rising back to $1.438, still down 1.01 percent on the day.
Weakness in the euro and the pound helped the dollar index .DXY, which rose above 87.00, the highest since March 2009.
Bund futures opened 42 ticks higher at 123.95, while 10-year euro zone bond yields were flat.
Stocks and euro slip on austerity fears
LONDON - Stocks fell and the euro slumped to a four-year low on Monday as Asian markets caught up with Friday's sell-off in the West, shrugging off encouraging data and remaining fixated on troubles in the euro zone.
Shanghai stocks were down 5.07 percent, reflecting the negative mood across Asia, as investors worried that European austerity measures would stifle a recovery, affecting Asian exports to the West.
"It is probably a good excuse for a sell off," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin. "We have a recovery but it is a feeble one. If you load on to that recovery a severe dose of fiscal austerity, the prospects then for a sustainable recovery (are strained)."
The FTSEurofirst 300 index of top European shares opened down 0.43 percent, while core euro zone government bond futures opened nearly half a point higher as investors sought the safety of German paper.
On Sunday, German Chancellor Angela Merkel said that a $1 trillion EU/IMF bailout plan had only bought the euro zone time to tackle its fundamental problem -- a yawning gap between its strongest and weakest economies.
World stocks as measured by the MSCI All-Country index were down 1.07 percent whilst the more volatile emerging markets index .MSCIEF was down 2.46 percent.
Earlier in Japan, the Nikkei fell 2.17 percent to a 10-week closing low, mirroring falls in the rest of the region as investors ignored encouraging economic data from the United States, Japan and Singapore.
Exporters such as Canon Inc were hit as the low-yielding yen rose broadly, boosted by the rise in risk aversion, whilst China-linked shares such as Komatsu were clobbered by the fall in the Shanghai index.
The euro extended its losses to $1.228, down about 0.6 percent on the day, and over 14 percent lower year to date, making it the worst performing major currency.
"The euro is a one-way trade right now and capitulation is on my mind. I can see a move toward $1.2000 at least," said Kenneth Broux, market economist at Lloyds Banking Group.
Sterling slid to its lowest level since March 2009 at $1.4249 before rising back to $1.438, still down 1.01 percent on the day.
Weakness in the euro and the pound helped the dollar index .DXY, which rose above 87.00, the highest since March 2009.
Bund futures opened 42 ticks higher at 123.95, while 10-year euro zone bond yields were flat.