John Dance

Member Article

Bank worries drive markets lower again

With the results of the European Banking Authority stress tests posted after market close on Friday, Monday’s open was always going to be dictated by the broken record that is the European debt crisis. Despite all UK banks passing the tests, investors sought little comfort in the outcome with many critical of the leniency of the parameters which did not factor in any form of European default. It would appear that the market is still focused on Europe’s apparent political inability to prevent contagion to the core nations. The FTSE immediately lost around 1% to initiate another risk off day that was experienced globally.

Unsurprisingly, amongst the worst performers of the FTSE were the banks, with Lloyds, Barclays and RBS all finishing lower by more than 6%. Even the defensive sectors were badly hit, with the FTSE gradually losing ground throughout the day to close 1.6% lower at 5753 point.

In a scenario that has become familiar in the in the past few months, safe haven assets rallied with Gold posting a new all time high above $1600/oz and silver putting on more than 4% to breach the $40/oz mark. The US dollar was stronger against both Sterling and the Euro, the latter also suffering against the Swiss Franc. The yield on 10 year Treasuries was pushed lower to 2.90% in a trade that seems counterintuitive considering the equally unpalatable debt issues across the Atlantic.

Locally, investors reacted badly to the marginal loss experienced by Angel Biotechnology’s in the first 6 months of the year. The pharmaceutical and biotechnology contract manufacturer initially lost around 10%, before recovering somewhat to close down 4.5%.

This was posted in Bdaily's Members' News section by John Dance .

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