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The Ongoing European Debt Crisis Shoots Down Stock Prices
The European debt contagion has struck the local stock. It has eventually spread across the Atlantic, and has sent the stock prices crashing down. Dan Greenhaus, chief global strategist associated with the brokerage firm, BTIG, said that the primary concern of all the global economic giants is to stabilize the euro market.
According to a fresh report, the debt of the European nations is snowballing even after several debt relief strategies were taken up by the Union. Executives at the helm of governance are spending sleepless nights because of the failure of their budgetary plans. The entire European continent is engulfed in political unrest and social anarchy. The news reported the dissolution of the Dutch Parliament and the election defeat of French President Nicolas Sarkozy to his counterpart Francois Hollande. Presidential candidate Mr. Hollande is regarded as a staunch critic of the austerity plans pursued by the two most prominent European leaders, French President Sarkozy and German Chancellor Angela Merkel.
It was imminent that a bigger economical setback was looming over the global financial markets following the reports of European debt and political crisis. The severity of this crisis was felt with a major loss in the index by Germany’s DAX, whose stocks fell to 3.4%, a record low in six weeks. It was followed by the drop in index of France’s CAC to 2.8%, which usurped the previous year’s profits.
NASDAQ’s points fell sharply to 30 points or it fell by 1% (2,970.45). Moreover, the index of Standard & Poor’s came down to 11.59 % or 0.8% (2,970.45). Seeing such a bad fiscal trend, the traders are scurrying for greener pastures. This means that they are moving their money to the treasury. This action has led the Treasury note see its price go upwards. As a direct consequence of this shift in trading behavior the Treasury’s yield came down to 1.94% from 1.96%.
In this economic downturn the global food major Kellogg Co. is compelled it to reduce it’s bottom-line. So, it’s quite natural that its stock’s price will fall by 6.1%. As the bourses closed for the day, stock market was abuzz with the Netflix announcing its first quarterly loss experienced in the last seven years, which came down by 13.6%. The price of crude oil of West Texas in New York came down to stand at $103.11 per barrel.
In terms of David Kelly, chief market strategist of J.P Morgan Funds, investors are seeking ways to churn out profits out of the debt crisis. This is because of rise of the stock prices during the first quarter of this fiscal year, which is evident by the 12% rise of S&P’s 500 index. In addition to this, he opines that there is a lack of energy amongst the investors that is lowering the price of stock and pushing-up the rate of bonds.