LONDON (SHARECAST) - -Spain's financial system needs 53.8bn euros in stressed scenario
-ECB (Asmussen): Greece may need more aid -Bbg
-Moody's report on Spain awaited
-Spanish 10 year bond yields down 1bp to 5.94%
-French 10 year bond yields down 3bp to 2.18%
FTSE-100: -0.65%
Dax-30: -1.01%
Cac-40: -2.46%
FTSE-Mibtel 30: -2.29%
Ibex 35: -1.71%
The main European equity benchmarks finished the day, the quarter’s last, with sharp losses. That ahead of the results of private consultancy Oliver Wyman’s stress-test of Spain’s financial system. Those showed that the country requires 25.89bn euros in additional capital for its lenders, or 53.75bn under a so-called “stressed scenario”.
Define stressThe consultancy’s stressed scenario foresees the following: a 55% drop in house prices (from their “peak”) and 6.5% contraction in GDP between 2012 and 2014, an 85% fall in land prices and an unemployment rate at 27%.
Although the above is less than the 62bn euros estimated by Madrid back in June it remains to be seen if financial markets “will buy it.”
In parallel, French President Francois Hollande has unveiled his first annual budget, which contemplates raising taxes by €20bn euros, including a 75% levy on incomes above €1m. He aims to cut the red ink to 3% of GDP from 4.5% in 2012.
Acting as a backdrop, weak quarterly earnings out from US outfit Nike, overnight, due to weakness in Chinese demand, were another contributing factor to the weakness seen in bourses. Nevertheless, it might be worth pointing out that according to analysts at S&P -today- Chinese growth should trough in the fourth quarter.
In a similar vein, ratings agency Fitch today indicated that the chances of a hard landing unfolding in China appear remote, while noting that authorities can deploy fiscal and monetary policies to ward off a harsh downturn.
Simply put, growth in the Asian giant is expected to slow down a by a gear or two, but not brake to a halt nor anything similar. Utilities lead falls
H&M was off after SEB AB and CA Cheuvreux SA advised investors to sell the shares. Air France is gaining 4% after an upgrade out of analysts at UBS AG.
From a sector stand-point the worst performers were: Utilities (-1.72%), Banks (-1.69%) and Construction&Materials (-1.68%).
Unexpected rise in Eurozone pricesEurozone consumer prices rose at a 2.7% year-on-year clip in September (Consensus: 2.4%), after a rise of 2.6% in the previous month.
German retail sales fell by 0.8% year-on-year in August (Consensus: -0.9%). The previous month’s reading however has been revised down to show a drop of 1.6% year-on-year (Consensus: -1.0%).
Other asset classes mixed
The euro/dollar is now off by 0.39% to the 1.2864 dollar level.
Front month Brent crude futures rose by 0.294 dollars, to the 112.30 dollar mark on the ICE.
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