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Markets calm after yesterday’s debt deal rally

Following yesterday’s surge in risk appetite, markets were noticeably calmer today as European indices opened broadly flat. The FTSE 100 was in positive territory for much of the morning, however the upside was limited as investors sought to lock into profits. As mentioned in yesterday’s market summary, the UK market is up around 16% in just three weeks and on track for its best monthly gain in nearly three years.

The major news of the day came in the form of an Italian 10 year bond auction, during which the embattled nation paid 6.06% for the debt. The figure is the largest in Italy’s Eurozone history, beating the previous record of 5.86% that was set only a month ago. In addition to this, the commodities and derivatives broker MF Global was subject to a downgrade from two credit ratings agencies yesterday over its exposure to peripheral European debt. Its shares, which trade on the New York Stock Exchange, were down sharply.

Domestically, UK consumer confidence fell to -32 points in October from -30 in September, according to market research from Gfk NOP. This level had not been seen since 2008, and highlights fears over the health of the UK economy. The UK’s blue chip index ended the day 0.2% lower at 5702, dropping just 11.6 points and weighed mainly by financials that had led the gainers yesterday. Lloyds was the worst performer losing more than 5%, although Barclays and RBS were not far behind.

This was posted in Bdaily's Members' News section by John Dance .