Debt concerns being felt around the globe again (ISFM) (18-03-2010)

Renewed concerns about Greece’s sovereign debt were weighing on equity markets and the euro today, as there is ongoing uncertainty about whether the European Union will agree to give Greece financial support.

The negative sentiment began affecting markets in the Asia region, despite robust gains on Wall Street overnight. Indexes ended mostly sharply lower after recent days’ gains, supported by announced plans from the U.S. and Japanese central banks to maintain low borrowing costs to help foster economic growth.

The euro was hurt, declining to $1.3674 in morning European trading, down from $1.3753 the night before in New York, while the dollar fell to 89.96 yen from 90.34 yen. After two days of sharp gains, oil prices fell toward $82 a barrel.

In Europe, it was thought that the uncertainty in the market was not only due the lack of clarity about Greece's future but also by European leaders' inability to find common ground on basic economic policy; criticism has been leveled from France at Germany, for running a trade surplus, which drives its trading partners, like Greece, to suffer deficits. Despite Germany’s objections for the EU to extend aid to Greece, according to reports, European finance ministers have been drawing up plans for a financial lifeline for the debt-stricken country.

Back in the U.S. stocks were trading in a narrow range Thursday after reports showed inflation remains benign and new claims for unemployment fell last week, although by not so much as to indicate that businesses are hiring again. Any positive sentiment was being tempered by ongoing concerns about debt problems in Greece.

Source: ISFM