Stocks around the world began falling this morning as concern from investors over the current financial crisis in the Eurozone reemerged. After a month of fairly consistent gains it will have come as a shock to many, who felt that the growth they were witnessing was a sure sign that Europe’s woes were finally drawing to a close. The primary root of this latest round of second guessing comes on the back of Spain’s hesitation in requesting a full blown bailout from the EU. While Spain openly admit to being in a financial crisis they are reluctant to ask for a bailout as it would push them into austerity, something they feel may do more long term damage than good.
The shift is in stark contrast to yesterday’s gains on their sovereign bonds, such as their 10 year bonds which rose by more than 6%. The gains were made after the European Central Bank’s President, Mario Draghi, announced details of their new government bond purchasing programme. By 10am (GMT) this morning those gains had been wiped out amid fears that Spain would not request a bailout, leaving the recent relatively stable European economy on a knife edge.
Akzo Nobel’s CEO takes “Sick Leave”
The world’s largest paint manufacturer, Akzo Nobel, announced today that their CEO Ton Buchner would be taking a month long leave of absence on the advice of his doctor to overcome a case of severe fatigue. The announcement, which was released from their Amsterdam headquarters this morning, said that CFO Keith Nichols would temporarily assume Buchner’s responsibilities. The company’s stock fell 5.5% shortly after.
Auto-makers Suffered in August
A gauge for European car manufacturers was the worst performer on the Stoxx 600 for the month of August. The news of a year on year drop in new car registrations of 67,000 last month sent the carmakers tumbling, with Renault leading the losses with a 3.8% dip.
Other southern European manufacturers to lose out were Peugeot Citroen, which fell 3% and Fiat SpA who recorded a 2.9% fall. German manufacturers were not safe either, as Volkswagen AG also dropped 2.2%.
Volex plc is the days biggest loser
Volex plc, one of Europes biggest providers of electronic optical hardware, saw its stock price plummet by 30% early on Tuesday morning after they announced their financial targets had been adjusted to reflect the loss of their biggest client. The company said it expected to roughly match its performance from the last fiscal year but investors were clearly concerned for the long term stability of the company after taking such a massive hit on future revenue.
Volex said they had also adjusted their expectations based on the delay of new product lines and a change “product component strategy”. The only real silver-lining was the suggestion from the directors that they were close to closing a deal with new clientele, however investors will not be inspired by such claims until more details are released.