A lackluster start on the UK market turned sour in afternoon deals yesterday as London shares tracked their North American cousins south. Concerns surrounding a Spanish bailout and Germany’s credit rating weighed around the globe and sluggish data from the US added to the downbeat market trend.
Spanish 10-year bond yields remained high on concerns that the country might request a formal eurozone bailout. Worries even spread to EU countries with known financial stability after Moody's Investors Service downgraded its outlook on Germany's AAA credit rating to negative amid fears of debt contagion. However, all of the member states of the monetary union reiterated their pledge for eurozone stability.
On the US economic data front, the Federal Housing Finance Agency's home-price index beat expectations in May, but manufacturing activity remains sluggish so far in July, according to Markit, and overall business conditions in the Federal Reserve Bank of Richmond region worsened in June.
“The markets have been much more anaemic today after the excitement of Friday and Monday’s sessions,” commented Kathleen Brooks, research director at GAIN Capital. “However, the same stresses and strains continue to be the dominant factor moving markets, which leaves risky assets vulnerable to another break to the downside.”
On the flipside, Croda International (CRDA) was one of only a handful of stocks to gain more than 1.0%. Shares in the chemical products manufacturer jumped 6.1% as investors welcomed a 6.3% rise in first half and an encouragingly-toned outlook statement.This article was originally published on Morningstar and provided by Holly Cook under the title: Spain Bailout Fears, Weak US Data Drag on FTSE.
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