The International Monetary Fund warned yesterday that the euro zone crisis remains the greatest threat to the global economy and warned that policymakers need to urgently strengthen fiscal and financial ties within the Euro-zone area.
Meanwhile, concerns over whether international creditors will extend their loans to Greece continue as the country struggles to meet deficit reduction targets.
At the close of the European session yesterday, France’s CAC 40 fell 0.50%, while Germany’s DAX 30 edged lower by 0.41%.
The U.S. markets were also hit by the negative sentiment, the Dow Jones Industrial Average fell 0.95%, the S&P 500 lowered by 0.62%, while the Nasdaq Composite index dropped 0.43%.
Late Wednesday, Standard & Poor’s cut Spain’s sovereign credit rating by two notches to BBB-minus, and maintained a negative outlook for country, citing mounting economic and political risks. This ratting is only one notch above Junk.
The ratings agency also warned that the capacity of Spanish political institutions to deal with the challenges presented by the current fiscal and economic crisis is declining.
European stocks open today session slightly higher despite yesterday Spain’s sovereign rate cut, although concerns over the handling of Spain's financial woes continued to weigh on market sentiment after Standard & Poor's downgraded the country's credit rating.
The Economic Calendar for today is relatively thin;
09:00 Van Rompuy-Barroso-Monti meeting
12:30 Initial Jobless Claims (Oct 6)
12:30 Trade Balance (Aug)
14:00 Merkel-Barroso meeting
14:00 G7 finance ministers meeting
18:00 Monthly Budget Statement (Sep)
23:50 Tertiary Industry Index (MoM) (Aug)
Gold futures edged higher during European morning hours on Thursday, bouncing off the previous session’s two-week low as fears over the handling of the euro zone's financial crisis intensify after Standard & Poor's downgraded Spain's sovereign-debt rating. Follow this downgrade, market participant went looking for safety in the dollar and of course in gold's.