Last week saw the rise of Spanish bailout terms come into the spotlights as concerns mounted on investors on account of delayed Spanish bailout. The FTSE 100 ended on a negative note starting the week on account of rising tensions between Japan and China. On the European front, failure to reach a consensus for the EU banking union kept investors wary.
Slowdown in China during the third quarter added to the gloom after the People’s Bank of China announced that the nation’s economy was in no shape to bounce back to recovery.
Tuesday saw the FTSE closing 20 points higher as narrowing of losses in the US markets prompted the blue chip index some relief.
As the week progressed, Spain continued to haunt investors who were looking for exits. Spain witnessed a mass anti-austerity protests along side Greece which was set to embark upon further austerity cuts.
The FTSE closed 91 points lower on Wednesday after comments from Spanish Central Bank about the state of the economy shrinking at a significant pace during the third quarter. Bank of England released its 3rd Quarter Credit conditions survey which pit mortgage businesses to expect a rise in lending during the fourth quarter.
On the stocks front, banking and mining sectors lost ground with RBS seeing a 5.5% drop.
On the economic front, the revised GDP for UK was set to 0.4%, from the first revision at 0.7% which gave a bit of optimism to the london Markets.
Markets were also boosted with news from China that the government injected £35.8 billion into the economy.
Meanwhile, Greece managed to reach an agreement for its bailout terms for 2013/14 but Spain continued to plague investor sentiment.
The FTSE closed 11.3 points higher on close of Thursday.
Friday saw the markets open in the green as Spanish government announced new deficit cutting measures and there was good news from Greece as well for agreeing to implement more spending cuts and tax increases to the tune of €13.5 billion.
Spainish deficit cutting measures would see another €40 billion and expectations were high that France would follow suit as well with a tax hike of €20 billion.
The optimism didn’t stay long as the market was rife with rumours that Spain would official seek for financial assistance, which sent the FTSE on a downward spiral.
| Indices at a glance | |
| EUROPE | |
| FTSE 100 Index | 5742.07 (-0.65%) |
| German DAX | 7216.15 (-1.01%) |
| CAC 40 | 3354.82 (-2.46%) |
| Dutch AEX | 323.18 (-1.80%) |
| ASIA | |
| NIKKEI 225 | 8870.16 (-0.89%) |
| Hang Seng | 20840.38 (0.28%) |
| ASX200 | 4387.02 (0.06%) |
| Shanghai Composite | 2086.17 (1.45%) |
| US | |
| NASDAQ Composite | 3116.23 (-0.65%) |
| Dow Jones Industrials | 13437.13 (-0.36%) |
| S&P500 | 1440.67 (-0.45%) |
Key events for the UK for the week ahead – October 1 – 5
01/10/2012 – PMI Index September: The week kicks off with the September Purchase Manager’s Index. August’s data showed a 49.5 fourh month high jump. With hints of better conditions in the manufacturing sector, September’s data could well hit the 50 mark and could pave way for the much needed expansion in the manufacturing sector.
Monday will also see the UK household lending data being released for August. July’s data showed a dip in the housing market sector. June’s mortgage approvals for house purchased saw recovery and is likely that this trend will be continued in August’s data as well. The BBA household lending data could see a rise to 49,500 but mortgage lending could see a drop in August.
03/10/2012 – UK Services PMI: The services PMI for September is due on Wednesday. The services PMI rose to 53.7 in August, up from 51.0 in July marking a high reading. The unusually strong data surprised the markets attributed to new incoming businesses. September’s Services PMI is expected to be out at 53.
04/10/2012 – BoE MPC Minutes: Thursday will see the Bank of England’s monetary policy committee meeting. It is likely that the benchmark interest rate would be left unchanged at 0.5% with no big changes envisaged in regards to the QE policy.
