Liams Last Post : Bad old days return , peripheral country sovereign debt fears now the main them in weak markets.

Good Afternoon ,

 

Back to the bad old days , the Dow heading for -200points , European markets all down in excess of 2.5% with Spain down over 5% . Interest rates were kept unchanged by the ECB and the UK BOE today but that was not the story , the contagion of fear about Sovereign debt fears in Greece and increasingly Spain has driven the latest bout of selling in Equity markets.

 

There is an interview with the Head of the IMF with RTL radio and reported on in the Wall Street Journal , "If I'm asked to step in, we'll do it, but I completely understand the Europeans who want to try to resolve the problem among themselves," Dominique Strauss-Kahn . Involving the IMF would effectively be an acknowledgment that the euro zone's own procedures for keeping members in check aren't strong enough, and it would also suggest that the euro zone is the kind of place that has to go to the IMF for help... this is the nub f the issue , it is one of credibility , there is no roadmap , the fact that the fears about the problems are escalating is enough to trigger this sell off. 

 

The fact that the earnings reports from Europe this morning were almost broadly within consensus is irrelevant. The price moves in the financials are the most stroking with the Irish Banks being hit in line with their UK peers.

 

Into the close of the market , there was an attempt of a rally of sorts and Irish Life which had gotten close to 2.90 rallied to close just above 3.00.

 

The construction stocks got hammered , Grafton dropped to a new recent low of 2.48 before rallying up to 2.57 , it seems like a only a few weeks ago that we were thinking that the 2.70 level would be an attractive entry point and here we are ina range of -5% to -10% below that. 

 

The stocks which have been the best performers look the most susceptible to a bout of profit taking as this nervousness sets in.

 

Have a good evening , lets see where the US closes tonight ... and the markets will be looking anxiously at the technical levels going in to the weekly close. The fundamentals look ok , valuations look ok , the technical analysts seem to be in the ascendancy though they are just highlighting the real fears in the markets and unless some solution becomes apparent in the short term we could be in for a rocky ride for the next while. 

 

Have a good evening 

 

Liam

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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