Financial markets decline as Obama approves airstrikes on Iraq

beggers August 10, 2014 0
Financial markets decline as Obama approves airstrikes on Iraq

Stock markets around the world fell and oil surged, as investors reacted to news that the US will carry out airstrikes on Iraq. Obama said in a late night statement:

When we face a situation like we do on that mountain, with innocent people facing the prospect of violence on a horrific scale and we have a mandate to help – in this case a request from the Iraqi government – and when we have unique capabilities to act to avoid a massacre, I believe the United States cannot turn a blind eye,” the president said in a late-night statement from the White House.

Japan’s Nikkei closed almost 3% down, while Australian shares were 1.3% lower. European markets are expected to follow suit. Brent crude jumped 0.9% to $106.39 a barrel, as the prime oil-producing region plunged further into chaos.

Investors fled to safe haven assets, driving prices of US Treasuries higher and yields down. The yield on 10-year Treasuries stood at 2.4%.

There were very strong trade figures out of China overnight, pushing the trade surplus for July to an all-time high of $47.3bn. That is a 50% increase on June, and 170% higher than last year.

Exports surged 14.5% from last year, to hit $213bn, as markets around the world recover, driving demand for Chinese goods. Imports dropped 1.6% to $166bn, helped by declines in commodity prices.

In the UK, the troubled Co-operative Group has unveiled proposals to change the way it is run, including crucial concessions on its board structure.

While former City minister Lord Myners had recommended removing all the democratically elected members of the Co-op from the board, the mutual is now offering those members three seats on the board.

The markets have opened down, as traders take fright at the prospect of US airstrikes in Iraq adding to rising geo-political tensions around the world.

  • FTSE 100 is down 0.5%, or 36 points at 6562
  • Germany DAX down 1.1%
  • Italy FTSE MIB down 1.2%
  • Spain IBEX down 1%
  • France CAC 40 dwon 0.9%

The world’s oldest bank, Monte dei Paschi di Siena, posted a huge loss in the second quarter, almost three times bigger than analyst forecasts.

Italy’s third biggest bank – which received €4.1bn in state aid last year – said net losses for the three months to June stood at €179m. That compares with forecasts of a €57.5m loss. Reuters reports:

Bad loans are the major problem for Italian banks ahead of a pan-European review of lenders’ assets and they are a major troublespot for Monte dei Paschi in particular because it has the highest proportion of soured loans among Italian lenders.

Official figures out this week showed Italy slid into recession again, which will make it even harder for banks to keep a lid on bad debts.

The Independent has a good story on HSBC, which has been accused of “shamelessly profiling” its customers by ethnicity and closing bank accounts belonging to Syrian refugees and students in the UK. Maria Tadeo reports:

Documents and email correspondence obtained by The Independent show that HSBC, which styles itself as the “world’s local bank”, sent letters to Syrian clients living in the UK telling them their accounts would be closed and giving them two months to find a new bank. It cited “increased requirements for compliance with international obligations concerning payments to and from sanctioned countries”.

The letters claimed that the decision to terminate their accounts was based on the bank’s “own assessment of risk” and did not reflect the manner in which they conducted their business.

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http://www.theguardian.com/business/blog/live/2014/aug/08/global-markets-plunge-as-obama-approves-airstrikes-on-iraq-business-live

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