Things are starting to get interesting in Europe again. The top 13 decliners today among the benchmark equity indexes were all in Europe:
A 5% drop in one day is nothing to sneeze at. A 650 point drop in the DOW would certainly move the economy to an earlier spot in the news hour. The FTSE MIB Index is down 9.5% for April and just move into the red for the year. Spanish equities are also having a rough go of it and with today's move have dropped below the lows of 2011. Curiously enough, the equity markets of Greece and its satellite Cyprus were both up big today with Greece gaining 6.6% and Cyprus surging an astounding 10.6%. Let's pull up a C-PIIGS comparison chart of benchmark equity indexes going back to the beginning of 2011:
It's interesting to see that the Portuguese, Spanish and Italian equity markets have all converged on the same spot and are sitting at or just below the 2011 lows. Greece and Cyprus have already had their collapse and Ireland has managed to separate itself from the pack. As for the next shoe to drop, it is looking more and more like it will be Spain. As we mentioned earlier, the Spanish stock market is one of the few stock markets that has already dropped below its 2011 lows. Additionally, in the CDS space, Spain's 5 Year Swaps are up 22% while every other CDS we track is either flat or down.
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ReplyDeleteThanks for the feedback. Stock markets had a big day today but many are in the midst of a downward trend. Yields on sovereign bonds have come down quite a bit lately (especially Bunds and Treasuries) which could be a sign that investors are losing their appetite for risk.
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