Thursday, December 8, 2011

Today's Major Market Move: Italian Stock Market Declines Over 4% in Thursday's Session

Is the honeymoon already over with the latest plan to deal with the European debt crisis? The Italian equity market took it on the chin today with the benchmark FTSE MIB Index declining 4.3%. The decline was in part caused by comments from the head of the European Central Bank head where he stated that they had no intention of increasing purchases of Italian bonds. I'm wondering if the recently appointed Mario Draghi is talking tough (at least for now) in order to avoid any appearance of favoritism towards his home country. The negative sentiment spilled over into the U.S. equity markets, particularly the financial sector, where several indexes were down by over 3%. Here's the list of the worst performers on Thursday:

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There were significant moves in the CDS markets as well, with Spain, Italy, France and Germany 5 Year CDS prices all gaining more than 10%.

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It was one of those comprehensive risk-off days with all of the inflation hedging commodities getting sold off. The top 6 commodity decliners were all either precious metal or energy related:

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