Spreadex Market Update
FTSE’s losses widen as post-Brexit banking bloodbath continues
Dropping nearly 300 points at the open the Dow Jones is now teetering on the edge of 17100 for the first time in 3 and a half months. Like in Europe the banks seem to be bearing the brunt of the bad news, with Goldman Sachs and JP Morgan both seeing notable falls. For those who are interested and, at the moment, you would be forgiven for not being, the US offered up some data this afternoon. The country’s good trade deficit unexpectedly widened to $60.6 billion, while the flash services PMI remained stuck at 51.3 for the 2nd month in a row.
The situation in Europe only worsened as the day went on, the FTSE, DAX and CAC now down anywhere between 2.8% and 3.3%. The banking sector is continuing to bleed out at an alarming rate; Barclays and RBS have both lost over 16%, while Lloyds has fallen just shy of 10%. On the continent things are just as bad, with Deutsche Bank currently worth around 40% of what it was at this point last year after falling another 7%.
Alongside the pound, which has now lost another 3% against the dollar, the banking sector is currently the biggest worry for the markets. That provides a headache for the Bank of England which may be facing the need for another injection of cash to maintain liquidity AND a rate cut, the latter move despite the likelihood of ballooning inflation thanks to the plunging pound.
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