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Markets fell across much of the globe yesterday, despite renewed efforts by central banks desperate to reignite struggling economies exposed to the Eurozone crisis.
The Bank of England (BoE) announced its money printing pressses would be switched on once more – with £50 bn of extra quantitative easing (QE) aiming to combat continued tight credit conditions and an “increased drag” on the economy, due to effects of the ongonig euro crisis.
The European Central Bank (ECB) cut its base rate by 25 basis points to 0.75 per cent, and the rate on its deposit facility by 25 basisis points to zero, with boss Mario Draghi stating he expects the economy to begin contracting again. “Indicators point to a renewed weakening of economic growth and heightened uncertainty,” he said.
China’s central bank cut interest rates for the second time in a matter of weeks and Denmark even cut one key rate to minus 0.2 per cent , yet markets were unimpressed with the global efforts to halt the slowdown, the Euro Stoxx 50 falling 1.19 per cent, the French CAC40 1.17 per cent while the FTSE 100 rose just 0.14 per cent.
In other euro crisis news, the recovering Irish government’s borrowing costs dropped below struggling Spain’s yesterday, while new data revealed Germany’s industrial output had risen 0.6 per cent in May, depite the weak state of its Eurozone neighbours.
Greece indicated it would drop plans to seek easier terms for its bail-out and more than 150 German economists voiced opposition to Europe’s plans for a banking union in an open letter to a German newspaper.
