Spain is downgraded.
Added pressure on EU
The rating agency Standard and Poor has downgraded Spain on weak economic growth prospects. S & P sees zero growth for Spain in 2012 due to high unemployment and huge private credits. The downgrading has increased the pressure on EU-countries to recapitalize banks and solve the sovereign debt crisis in Europe. One hinder was overcome yesterday when Slovakia as finally ratified the the proposed emergency fund.
After a strong market rally over the last days investors are back on the fence. European markets fell. Dow Jones was down 0,35 % and most Asian markets ended in red. The Euro is stabile against USD at 1.3789, Japanese Yen is falling against the dollar trading at 76, 90. Brent oil is steady on the USD 111 level while NYMEX is down to 84,50 on increased oil storage numbers from the US.
Market futures give no clear indication on how the decisive US-markets shall open today. Analysts seem still to be optimistic as to a temporary solution to the problems within the Euro-zone. Spain’s downgrading is, however, a stark reminder that Greece is not a lonely sovereign problem. Portugal yesterday introduced new emergency matters to tackle it’s grave economic problems and Italy is on the verge of a new government crisis. The fear of a serious contagion is overwhelming. Investors have to be prepared for some dumpy weeks ahead.