Last Friday, for a third consecutive day, Wall Street plummeted. According to a Reuters report by Edward Kurdy, this was due to “worries about the Italian banking sector and Greece's debt crisis.” Despite this, the S&P 600 still had its “200-day moving average in a sign buyers still see value.” Still, all was not smiles for the S&P as its 500 dropped “for the seventh week in the last eighth,” down 7 percent “from its 2011 closing high at the end of April.” Yet it still stayed “within striking distance of its 200-day moving average.” This line has been tested twice in recent trading. So far though, it’s been a “springboard for stocks.”
Greeks
Problems are abounding with Greek’s government too, with investors fearing that it may not ultimately “pass an austerity plan next week,” due to an opposing electorate. This could result in its defaulting on its debt repayments. According to chief market strategist of ConvergEx Group, New York, Nicholas Colas, it seems that politicians don’t quite get the sensitivity of financial markets to such decisions. At some point there is concern of the political vote going against the market.
EuroZone Issues
Sharp drops were encountered at UniCredit SpA and Intesa Sanpaolo (Italy) with increasing worried about the banks’ capital positions. There was a brief suspension in the trading of these shares too. Other plummets were seen with the Dow Jones Industrial Average that went down to 115.42 points as well as the Standard & Poor’s 500 Index which dropped 15.05 points. As well, the Nasdaq Composit Index lost 33.86 points. In addition, there was a drop in the Euro against the dollar for a “third straight session” fueled by concerns (again) of Greek’s parliament not following up with its intended austerity measures.
So it seems that only time will tell what will happen with currencies and trading. A lot is going to depend on political moves – especially vis-à-vis the Greek government – in the next few weeks.
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