View the article online at http://citywire.co.uk/wealth-manager/article/a558351
Barrage of S&P eurozone downgrades reins in FTSE
by Max Julius on Jan 16, 2012 at 09:26
The FTSE 100 meandered and the euro hovered near a six-month low on Monday after Standard & Poor's downgraded the credit ratings of a host of eurozone nations, including France and Austria.
The UK index of blue-chip shares inched 0.06%, or four points, higher to 5,640 and the All Share index rose 0.04%, or one point, to 2,901. See the FTSE’s performance and the index’s top winners and losers.
Fears over EFSF
Following a day of market rumours over possible downgrades, S&P cut its ratings for the nations on Friday, citing the monetary union’s failure to ‘produce a breakthrough of sufficient size’ to address its debt crisis. The move heightened fears over the bloc’s rescue fund, which could now lose its own triple A rating.
In early trading on Monday, the euro recovered 0.32% to $1.268 but was still close to the trough to which it sank on Friday, $1.262, its lowest level since August 2010. But the borrowing costs of Spain and France, the countries now at the centre of the crisis, slid, as did those of France.
‘There will be another round of policy action to shore up markets, but policy credibility has been dealt another blow,’ said Dominic Rossi, chief investment officer, equities, at Fidelity Worldwide Investment.
Referring to the bailout fund, he added: ‘Speculation around an [European Financial Stability Facility] downgrade will now grow, complicating its ability to raise capital and displace the [European Central Bank] in the sovereign bond purchasing programme.’
Other stock markets in Europe edged up: Germany’s DAX index gained 0.49% to 6,173, France's CAC 40 index added 0.01% to 3,197, and the FTSEurofirst 300 index of top European shares was 0.2% higher at 1,020.
Meanwhile, shares in Carnival (CCL.L) tumbled as the cruise operator warned that the loss of a ship that capsized off the coast of Italy would mean a $90 million (£60 million) hit to its 2012 earnings.
Carnival shed 401p, or 18%, to £18.50 in the wake of the disaster involving its Costa Concordia ship, in which at least five people were killed. The group said that in addition to the expenses due to losing the ship, it anticipated ‘other costs to the business that are not possible to determine at this time’.
‘At this time, our priority is the safety of our passengers and crew,’ Micky Arison, chief executive, added in a statement.
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.
More about this:
Look up the shares
- Carnival PLC
- Barclays PLC
- Lloyds Banking Group PLC
- Royal Bank of Scotland Group PLC
- Severn Trent PLC
- Centrica PLC
More from us
- Week Ahead: waking up to a eurozone nightmare
- Euro hammered and stocks hit by S&P eurozone downgrades talk
- Citywire Top Stocks
- FTSE Share Prices & Performance