US and Asian markets retreat as contagion fears return
US and Asian markets retreated overnight as optimism over the Spanish bailout fizzled out, to be replaced once again by contagion fears.
Despite the €100bn bailout of Spanish banks, concern remains about the excessive levels of debt in peripheral eurozone economies, and the knock on effects this could have on the entire continent.
Yesterday’s bailout failed to stem selling of Spanish debt, with yields racing back towards 6.5% as investors feared the injection of capital will push up the country’s public deficit.
The move spooked markets, with the Dow shedding 143 points, or 1.1%, to 12,411, giving up a four day winning streak.
The S&P 500 closed down 1.3% at 1,308.
In Asia, the Nikkei lost 1.3% to close at 8,536, while Hong Kong’s Hang Seng fell 0.6% to 18,835.
This article was first published on Investment Week