Global markets peeled lower on Friday night, with both European and US markets ending the week in the red. European markets struggled as recent protests in Spain and Greece against austerity plans heightened investors’ concerns as the turmoil could impede political manoeuvring.
Moody’s upcoming review of the Spain’s credit rating could add to the region’s challenges. Last Thursday, ratings agency Egan-Jones cut Spain’s sovereign rating further into junk status, citing the country’s faltering banks and struggling regional governments.
In London the UK’s FTSE 100 shed 37 points (+0.7%) to settle at 5742, whilst the French CAC was belted 2.5% and the German DAX shed 1%. Stateside, the Dow Jones lost 49 points (-0.4%) to settle at 13437, whilst the S&P (-0.5%) and tech-heavy NASDAQ (-0.7%) were slightly weaker.
Despite Friday night’s losses, Wall Street closed its best third quarter since 2010 after a wave of central bank actions sparked a dramatic reversal in equity markets. The S&P 500 climbed 5.9% over the quarter as central banks geared up to boost liquidity and kick-start their flagging economies.
The move has lifted the benchmark index as much as 17% this year, recently pushing the S&P to its best level in five years. For the third quarter, the Dow rose 4.3% and the Nasdaq climbed 6.2%.
Investors dissected with more soft US economic data Friday night, as business activity in the Midwest contracted for the first time since 2009. The soft read followed other weak regional manufacturing reports and a sharp drop in US durable goods orders last month.
The euro fell against the US dollar on Friday, declining for a second straight week, as uncertainty persisted about Spain’s prospects for receiving a bailout to prop up its ailing banks.
Oil capped the biggest quarterly increase this year on concern that escalating Middle East tension will disrupt supplies and as gasoline surged to a five- month high.
Crude for November delivery gained 34 cents (+0.4%), to settle at $92.19 a barrel on the NYMEX. Futures dropped 0.8% on the week and 4.4% on the month. Today’s session will bring us the Melbourne Institute inflation gauge, at 10:30am, AEST.