The euro continues its slide Monday, followed by stocks, oil and U.S. index futures. After a short rally last week, the euro turned sour again after the Spanish government came to the rescue of a small savings bank over the weekend, refocusing market attention on the risks associated with euro-zone lenders.
“We have our eyes on the exit and we’re not going to be afraid to walk through.”
Investors are fleeing all but the safest securities on concern European leaders won’t be able to coordinate a response to rising levels of government debt from Greece to Spain, while U.S. legislation threatens to curb credit and hurt bank profits, Bloomberg reports.
The euro fell Monday after the Spanish government came to the rescue of a small savings bank over the weekend, refocusing market attention on the risks associated with euro-zone lenders.
The rate banks say they charge each other for three-month loans in dollars has almost doubled since February.
“It’s not inconceivable to imagine a situation where the markets behave so poorly, the liquidity behaves so badly, and risk-tolerance just evaporates that — particularly in Europe — consumers contract, businesses stop hiring and stop investing, and economic activity halts.”
Exxon Mobil Corp. fell 1.1 percent and Merck & Co. retreated 0.8 percent in Germany, pacing losses among Dow Jones Industrial Average shares in Europe. Campbell Soup Co., the world’s largest soup maker, and Phillips-Van Heusen Corp., owner of the Calvin Klein brand, may be active before releasing their latest earnings.
Futures on the S&P 500 expiring in June lost 0.5 percent to 1,078.9 as of 10:18 a.m. in London. Dow average futures retreated 0.4 percent to 10,126 and Nasdaq-100 Index futures fell 0.5 percent to 1,809.75.
“I don’t think we’re out of the woods yet on the downside but markets are so volatile that they can easily flip,” Ted Weisberg, president of Seaport Securities in New York, says in an interview with Bloomberg Television.
If gains from May 21 don’t continue, “we have our eyes on the exit and we’re not going to be afraid to walk through.”
Market Snap Shots
Euro market at noon, CET; note the declining On-balance Volume indicator.
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