Friday, July 27, 2007

Volatility in UK and European equity markets remain after Asia and US stocks tumble

Equity turbulence follows credit market sell-off

The FTSE 100 rapidly fell 0.9 soon after opening this moring but at the time of posting this blog has rallyed, up 0.18. David Buik at Cantor said, "With uncertainty prevailing on credit, markets are likely to see levels of volatility like this for many sessions to come, until the strength of losses from sub-prime level are known and whether they are containable”. Fears about an end to the levereged buy-out boom which had boosted share prices has created turmoil due to increasing difficulty in raising funding for takeovers and buy-outs. During Thursday trading London's blue chips experienced their largest sell-off in more than four years. "Bad news has been building for months and these worries have now come to a head”, said Ronan Carr, equity strategist at Morgan Stanley.

Posted by denzil @ 12:19 PM (561 views)
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2 thoughts on “Volatility in UK and European equity markets remain after Asia and US stocks tumble

  • planning4acrash says:

    Equities markets will re-price the risk of mortgage loans, effectively making a decision on liquidity within the market. They will re-price that risk every time that interest rate rises feed through. This comes first, then there’s a delayed effect on the house market itself. If you have equities in housing or own housing, this is the trigger to profit take and move cash to less risky investments, it may indicate that the time has already passed! Tough luck landlord, by the way, has he been chucked out? Or is he busy pumping water from his waterlogged flats?!

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  • Whiteknight says:

    The fact that even one person on the planet is still waiting to find out whether sub-prime losses are containable means that many more “shocks” to the market are on the way.

    If you suffer, as i do, from the morbid fascination of watching everybody waking up to find out the entire basis on which both their worth and their credit worthiness were determined was a steaming pile of the good stuff – then please pull up a seat and enjoy the action as the various reinforcing feedbacks kick in. If contagion feels rapid now then “you ain’t seen nothing yet.”

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