It was seriously a bad day out there in the European stock markets with just red tickers rolling on all over the place. The downgrading of US economy from S&P is the actual reason behind this downfall. In first few hours of trade, FTSE, CAC and DAX had started lower and fell to around 2 percent each. But as soon as US markets opened and began their journey towards the bottom of the ladder, they were hit more which eventually led to a sad closing.
FTSE ended the start of the week at 5,068.95 points, 3.4 percent lower from its previous close. The French index, CAC, fell even worse. Down 153 odd points, it showed 3,125 as the number after losing 4.7 percent. But the hardest hit was DAX. In Frankfurt, the scenarios changed drastically when Dow Jones and Nasdaq started their plunge. At close, DAX was 312 points lower which accounts for 5 percent; it closed at 5,923.27 points. Yes it certainly was a serious blow given the problems going on in United States and also in the European zone. The question that everyone seems to ask is, ‘What’s next?’ A very good question in fact, the answer to this can be found in few hours when the US markets close.
The Dow along with Nasdaq and S&P 500 was weak after the downgrade. In just few hours of trade, Dow is trading more than 500 points lower at 10,940 levels which actually is ‘bad’ news not only for Europe and US, but for the global markets as well. The S&P 500 is leading the pack down with falls of 6 percent and more and is lurking closer to the 1100 levels. Nasdaq is not doing good either; it has lost almost 6 percent and more importantly, the crucial 2400 levels for the index are broken.
If this ‘downfall’ continues for the US markets and they are not in a mood to recover back by close, there remains just a slight hope for the globe. A hope that some mysterious intervention from the skies stops the debacle! At the moment, 10000-10100 levels appear to be strong support for Dow but with the way it has fallen today, the upcoming week holds its own significance. Also the fears of S&P breaching 1100 points and Nasdaq falling another 100 points in the coming days will be a huge thing to watch out for.
For the FTSE, the 5000 levels would prove to be significant and falling below that can mark a phase of constant corrections for next few days. Same is the case with DAX. It has already broken 6000 levels and is inching closer to the 5900 mark. CAC has a similar scenario to deal with; the 3070-3100 band is crucial for the index and falling below it will be a serious concern. The market sentiment is negative for sure and investors are not ready to trust the markets. The downgrading of US economy, crisis going on in Italy and Europe along with the commodity prices are factors responsible for a ‘no confidence’ movement amongst investors all across the globe. What appears next in line is a difficult week so far!