Stock markets’ run-up halted on Tuesday

9th April 2008, Comments 0 comments

The markets closed lower after IMF stepped up warnings about global financial crisis.

9 April 2008

MADRID - The recent run-up in share prices was halted in its tracks on Tuesday after the IMF stepped up its warnings about the scale of the global financial crisis.

Most of the stock markets closed Tuesday’s session lower, with losses - depending on whether the IMF referred to countries more or less directly - in some cases of over 1 percent, as was the situation in Spain.

The Spanish blue-chip Ibex 35 lost 1.15 percent, with the domestic economy currently the focus of many international analysts. Despite the fall, the benchmark index managed to close above 13,700 points, after at one point having dropped to as low as 13,675 points.

Investors have to do some complex number-crunching regarding the financing needs of individual companies, including the banks, and their ability to generate cash flow to arrive at some idea of how this will impact on their earnings for this year.

Although the ratings agencies have lost followers of late, investors still pay heed to their recommendations and most of them are far from optimistic about the Spanish retail banking sector, which is very dependent on the international credit markets.

The figure the IMF put on the losses caused by the crisis came as no surprise, although investors are starting to do sums in order to find out if there is a difference in the amount of losses already made public and the amount given by the multilateral agency.

Given that there was no let-up in oil prices, even bearing in mind demand for crude will fall as a result of the economic crisis, the reaction of investors was one of caution. This was reflected in turnover in the Spanish continuous market, which fell for the second session in a row to EUR 3.063 billion.

[El Pais / Rafel Vidal / Expatica]

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