Italian downgrade

adds to market fear

Moody’s downgrade of Italy has increased volatility prior to opening of markets in Europe. After steep falls Dow Jones and Nasdaq turned around during last hour’s trade and ended up 1,44 and 2,95 % respectively. The EURO/USD corrected down upon the news of the Italian downgrade from 1.3365 to 1.3305. The rally did not influence Asian traders. Hang Seng dropped new 3 %. One share is up for each three falling shares. Copper gained for the first time in six days, but is 35 % down from it’s peak in January.

Copper is though a sensible indicator on industrial activity and yesterday’s gain might signal that the bottom trend is starting to phase out. Most analysts do, however, agree that the worst is not yet been seen, and that markets still could fall another 10 – 15 %. A lot of wild speculation going on illustrated in Gold trading. Gold fluctuated between 1680 and 1605 during yesterday’s session opening the morning at 1630. Yen is steady towards USD at 76,665. Downward trend in GBP continues.

Italian SOVEREIGN debt was downgraded from A2 to AA2. Moody’s Investor Service is finding future perspectives for Italy negative with weak economic growth and problems and consequent problems in refinancing their debt. These are problems very similar to those facing Greece and other debt-stricken EU-countries. Before EU is coming up with a credible answer as to how to handle the sovereign debt problems market volatility is going to continue.