Turmoil in stock and currency markets
US, European and Asian stocks have plunged as the situation in the Eurozone appears increasingly chaotic. Relentless selling has occurred due to fears that a full scale debt crisis is increasingly likely to hit the fragile global recovery, with some claiming a double-dip recession is not impossible.
Pound Sterling – UK Markets
Sterling began to rise from the 14-month low against the US Dollar yesterday, in the midst of a volatile trading turn, as investors seek risk-aversion.
Positive trade data has been released regarding British car output, signaling a recovering economy. Output was up 44 percent in April in comparison with one year earlier; a total of 98,920 new cars were produced in Britain last month. The Government’s incentive scrappage scheme- introduced to boost the sector- resulted in 400,000 new car registrations.
The London stock market remained nervous this morning ahead of the meeting of European finance ministers in Brussels.
US Dollar – US Markets
The US Dollar has fallen against the Pound and the Euro so far this morning.
This follows significant events pulling all major US markets down last night. This was in response to the Eurozone crisis, a pending vote on changes to US financial regulation later today and also the release of unexpectedly disappointing unemployment figures.
Whilst analysts were anticipating positive figures, US unemployment benefits actually rose to a three month high of 471,000.
Euro – European Markets
The Euro has gained against the Dollar in advance of a day full of significant meetings.
German Parliament is due to vote today in order to approve their hefty contribution to the large-scale rescue package for Greece and other Eurozone nations drawn up two weeks ago. The EU President is also hosting a meeting of finance ministers in Brussels to discuss reforms to economic governance and David Cameron is also due to meet German chancellor Angela Merkel.
Discussions are likely to focus on the sudden steps that Germany took earlier this week to introduce a temporary ban on naked short-selling and whether future restrictions will require tighter governance. Germany are thought to be requesting a Euro regime re-write that will include budget deficit ceilings for member countries.
The German Chancellor made a public plea to world leaders to tighten controls on the bank and help save the Euro.
Other Currencies – Highlights
The Yen has declined following a surge this week – this is in response to the Finance Minister suggesting that Japanese authorities may act to weaken the currency to ensure that Japanese goods remain competitive overseas.
The Canadian dollar has fallen to its lowest level in a fortnight after equities and commodities fell in response to Europe’s debt crisis.