It was choppy session for European stock markets on the first trading day after Friday’s mass downgrade by Standard & Poor’s of credit ratings for nine of the seventeen eurozone countries.
The region’s bank shares were being sold off, but investors said the downgrades were expected so the general reaction has been pretty calm. The euro also recovered from early losses.
The question now is what effect will this have on countries’ ability to sell their government bonds?
Dominique Dequidt, senior fund manager at KBL Richelieu in Paris said: “For the moment there is no particular movement on bond issues. Last week, the bonds auctioned by Spain and Italy did pretty well, so we’ll see how investors react to the French downgrade over the next days.”
Strategists said the problems with Greece trying to get a crucial debt swap plan with its creditors are actually more important than the S&P downgrades.
We will have to wait a day to see what US investors think of the downgrades as Wall Street was closed on Monday for a public holiday.