Monday 20 November 2017

Debt crisis: Shares gain on strong US figures but markets nervous

People walk past the New York Stock Exchange. Photo: Getty Images
People walk past the New York Stock Exchange. Photo: Getty Images

Philip Whiterow

Stock markets continued their revival today as US retail sales came in better than expected and European markets reacted favourably to the short-selling ban imposed overnight.

But US consumer confidence fell to the lowest level this month since 1980 on concerns that volatile markets will force households to retrench.

The Thomson Reuters/University of Michigan index consumer sentiment slumped to 54.9 from 63.7 the prior month, much lower than analysts had anticipated.

Despite the mixed signals, the FTSE 100 Index in London closed up 3pc at 5,320, the CAC-40 in Paris 4pc or 124.2 points better at 3,214 and the DAX in Frankfurt 3.5pc or 200 points higher at 5998

European markets started to recover yesterday after it was confirmed that French president Nicholas Sarkozy and German chancellor Angela Merkel would meet next Tuesday to discuss the eurozone's financial problems.

Last night, European authorities took further action to bolster financial markets by banning short-selling of financial stocks in France, Italy, Spain and Belgium for 15 days.

Markets around the world have endured wild swings all this week sparked by concerns over the health of the US economy, sovereign debt fears and rumours over the financial position of several of France's leading banks, with Societe General and BNP Paribas especially singled out.

Christian Noyer, the head of France's central bank, was forced to state yesterday the rumours were "unfounded" and that the country's financial institutions were sound.

SocGen chief Frederic Oudea added the rumours were totally baseless and clients could have confidence in the bank.

Worries about the health of French banks unsettled share prices of UK banks, with fears over the knock-on impact hitting Barclays, Royal Bank of Scotland and HSBC.

London's blue chips, overall, have lost £145bn (€166bn) in value over the past two weeks even after today's rise.

US shares have also been very volatile, with the Dow Jones Industrial Average seeing swings of between 4pc and 5pc on a daily basis.

The US Commerce Department said retail sales rose 0.5pc last month, the best showing since March, with the previous two months figures also revised upwards.

The latest data and jobless figures yesterday followed a string of weaker-than-expected economic reports that had raised fears the US was heading for a double-dip recession.

Press Association

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