Market Buzz: Nervousness remains

Reuters / Olivia Harris
Caution will remain on the markets with investors’ eyes on a slew of macroeconomic statistics to be released Tuesday and Wall Street resuming work after a public holiday.

­“Tuesday will be fruitful in terms of statistics data to be released – German consumer price index data and US consumer confidence figures and the S&P/Case-Shiller House Price Index, which measures the change in the selling price of single-family homes in 20 metropolitan areas,” says Pavel Yemelyantsev from Investcafe.

The Russian stock markets rose on Monday, after the country's second biggest oil producer Lukoil reported strong results and as oil prices rose. The RTS gained 0.35%, and MICEX added 0.8%.

The markets were also supported by easing concerns about Greece's exit from the eurozone after weekend opinion polls showed Greeks are likely to stick with the euro and that Greek conservatives had regained a lead that would allow the formation of a pro-bailout government.

Global trading activity was moderate as Wall Street remained closed for the Memorial Day holiday on Monday.

European stocks were dominated by bearish sentiment.

The euro dropped to near 11-month lows on concerns about Spain's ailing banking sector following the announcement of bailout plans for troubled lender Bankia.

Spain's fourth largest lender Bankia said late Friday that it needed $23.8 billion in state aid to shore itself up against its bad loans – a far bigger bailout than expected.

Spain's Prime Minister Mariano Rajoy said the government had no choice but to bail out Bankia, “because the alternative was collapse.” Rajoy also repeated there would be no funds sought from Europe to rescue Spanish banks.

Shares in Bankia slumped by as much as 29% when they resumed trading Monday, though the losses narrowed and in afternoon trading it was down 13.38% at 1.36 euro. Spain's main IBEX 35 stock index closed down 2.17%. Interest rates on the government's 10-year bonds – an indicator of investor wariness – rose to 6.45%.

Other European indices were also mostly lower. France's CAC-40 closed 0.2 % in the red, and Germany's DAX dropped 0.3%. Britain's FTSE 100 was flat at 0.1% in the black.

Despite worries over Spain, investors were encouraged by the weekend opinion polls showed that Greeks, though tired of austerity measures, still want to stick with the euro.

In Asia, stock markets rose on Tuesday on speculation that policy makers in Beijing will take steps to boost economic growth, offsetting worries about the eurozone. Premier Wen Jiabao said China needs to stimulate growth.

China’s Shanghai Composite was up 1%, and South Korea’s Kospi rose 1.17%. Hong Kong’s Hang Seng Index added 0.42% and Japan’s Nikkei Stock Average gained 0.1%. 

Japan’s jobless rate unexpectedly rose to 4.6% in April from March’s 4.5%, stoking concerns that the economy could be weakening.