Confidence reels

21st February 2008, Comments 0 comments

The problems in the international financial sector deriving from the US subprime mortgage crisis continue to mount up.

21 February 2008

MADRID - The problems in the international financial sector deriving from the US subprime mortgage crisis continue to mount up. The seepage of bad news is going down badly with the stock markets and nobody is really sure how far the write-down of assets will stretch and how long this will take to run its course.

To make matters worse, alarm bells are starting to ring in the United States about inflation, which hit 4.3 percent in January. Concerns on this front are accompanied by doubts about whether the US economy is merely slowing or is going to slip into recession. The US housing start figure for January, showing an increase of 0.8 percent, suggested the economy is at a standstill, while the 3-percent drop in building permits pointed in the opposite direction.

The Spanish stock market closed down in line with the rest of the European bourses, with the blue-chip Ibex 35 off 1.43 percent. Paris dropped 1.49 percent, while Frankfurt shed 1.47 percent. Turnover in the Spanish continuous market was EUR 4.805 billion.

Apart from concerns about the banking sector, investors also had to contend with oil moving above USD 100 a barrel and the sharp falls in the Tokyo bourse, which lost 3.25 percent.

Although the Ibex 35 managed to close above 13,000 points, it lost that level temporarily on a number of occasions during the session, throwing into doubt how long it would hold onto that mark.

The main problem of the stock markets in times of crisis is that although solutions are being put in place, the results of these are never immediate. This leads to investors getting impatient, sparking a significant increase in volatility - which in this case has already lasted several weeks.

[Copyright EL PAÍS / RAFAEL VIDAL 2008]

Subject: Spanish news

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