News / Europe

Markets Calm After European Credit Downgrades

Traders look at a stock index board at Madrid's stock exchange, January 16, 2012
Traders look at a stock index board at Madrid's stock exchange, January 16, 2012
TEXT SIZE - +
Al Pessin

European markets reacted nonchalantly Monday after credit rating agency Standard & Poor's downgraded nine countries, including France and Austria, late Friday. The widely followed agency also reduced the ratings of Italy, Spain and Portugal, as well as Cyprus, Malta, Slovakia, and Slovenia.

Far from the sharp drop some had expected, Europe’s major market indexes stayed close to their Friday closing levels for much of the day, finally closing up slightly. The main stock price averages in Germany and Britain were both up - the German by more than one percent.  Even in France, which suffered the small downgrade from its top credit rating Friday, the market was up nearly a full percentage point.

Economist Zsolt Darvas at the Bruegel Institute in Brussels said despite Friday’s big news from Standard & Poor’s, Monday’s market calm did not shock him.

“I think this is not that surprising. Basically, what happened is something that S&P initially has initially indicated, it has been decided. I think markets have anticipated,” said Darvas.

Darvas noted that bond markets also were relatively calm Monday, even though France and the other downgraded countries will have to pay higher interest rates on their bonds. France had no trouble selling 8.5 billion euros worth of short-term bonds. The French president noted his country still enjoys the highest rating from the two other major credit agencies.

Currency markets were somewhat more volatile, with the euro losing a quarter of a percentage point against the dollar. But Darvis is not concerned, saying the euro’s value has been unjustifiably high in recent months.

“What happened in the past few days and during last week is that the euro became less over-valued than it was before. So I think that nothing wrong has happened to the euro so far,” said Darvas.

Although the credit downgrades did not have a big impact on the markets Monday, they do provide further warning signs for the economic state of Europe.  

The credit crisis is spreading beyond over-indebted countries like Greece, Italy, Spain, Portugal and Ireland to more solid economies like France and Austria. Darvas said that means the situation European leaders were trying to avoid is now more likely.

“I think it is increasingly likely that the euro zone will face a recession this year. It will be very, very difficult to avoid it,” said Darvas.

Darvas and other experts say European leaders need to do more to support the troubled economies and promote economic growth - subjects that will be high on the agenda at the next European Union summit at the end of this month.


You May Like

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid