Fears for euro as stocks plunge €1.8tn
In Ireland stocks fell 1.5% yesterday while British stocks dipped for a sixth day as the FTSE 100 Index recorded its biggest weekly loss in almost three years.
Given the volatility on the markets, concern was expressed about pension funds, with the public warned not to panic as these investments are predominantly longer term and less affected by short-term fluctuations.
European stocks retreated, with the benchmark Stoxx Europe 600 Index, which is a measure of stocks across Europe, posting its biggest weekly loss since November 2008. Speculation is mounting that Europe will fail to contain its sovereign debt crisis and the US economic recovery is faltering.
US treasuries tumbled, sending two-year yields up from record lows, and the dollar fell as stronger-than- forecast jobs growth eased concern that the nation will slip into a recession.
The Dow Jones Industrial Average swung in a 416- point range before closing with a 0.5% gain at 11,444.61. The Nasdaq was down 0.94% at 2,532.41.
A report yesterday showed that the US economy added 117,000 jobs in July, more than the 85,000 average estimate of 88 economists surveyed by Bloomberg News. The unemployment rate dropped to 9.1% as a result.
Daniel Weston, a portfolio adviser at Schroeder Equities GmbH, said investors are pleased with the better- than-disastrous jobs data, taking some of the pain out of the market carnage.
Also yesterday, economists polled by Reuters cut their forecasts for Ireland’s mid- term growth, underlining the challenge facing the country as it tries to cut its debt mountain.
The average forecast of 10 economists polled said gross domestic product would grow by 2% in 2012, down from 2.2% in last month’s survey. The economy will expand by 2.85% in 2013, below a forecast of 3% last month, the poll showed.
On the positive side, credit rating agency Standard & Poor’s left its assessment of Ireland unchanged, saying it believed the Irish economy was “prosperous and open”.
Fears are mounting that Italy and Spain could be next to require bailouts.
Doubt also spread through US markets that Congress will fully implement a $2.1 trillion deficit reduction plan.
