European debt crisis and US economic woes 'affecting Wall Street'
The troubles are not limited to Europe however, as the UK is also struggling to rebuild its economy following the previous recession and the threat of another downturn is looming the US.
It is difficult to escape news regarding the eurozone debt at present and those learning how to be a trader will no doubt be aware of the difficulties facing many nations on the continent.
Fitch ratings agency has now downgraded the country's rating from AAA with a stable outlook to negative. The enterprise stated it made this decision due to its "declining confidence that timely fiscal measures necessary to place US public finances on a sustainable path and secure the US AAA sovereign rating will be forthcoming".
Furthermore, fears have been supported by comments from the Organisation for Economic Co-operation and Development (OECD) that the eurozone is on the brink of slipping into another recession.
According to Chris Low of FTN Financial, this is likely to affect Wall Street and could alter the decisions people learning how to be a trader make when planning their next move.
He said the changes in US markets have been "amazing" in recent days, though there have been many contributing factors such as Thanksgiving. Because of the Thursday holiday (November 24th), a significant number of traders could have been away from work for four days and will have therefore engaged in "quite a bit of position squaring" ahead of the break.
"We had in fact a huge amount of selling pressure in the first three days of last week and I suspect there just wasn't a whole lot of selling left to do come Monday morning," Mr Low stated.
He also acknowledged traders have had reasons for optimism, such as positive sales figures that pleased retailers the Friday after Thanksgiving, which is known as Black Friday due to reductions made in a bid to encourage spending and get people to part with their money in the run-up to Christmas.
The expert noted that although there are differing figures on how well retail sales actually went - while some reports show transaction increases of six per cent, others reveal 15 per cent growth - the results were positive and likely to have affected trade.
However, this recent positivity does not detract from the negative economic movements across the Atlantic and the fact "last week was the worst week for US equity since the early 1930s during the depression", Mr Low continued.
A recent 300 point gain on the Dow Jones industrial average may be been welcome, but it does not take away from the fact the index shed 1,000 points last week, he claimed.
This, combined with the OECD's prediction, is likely to have worried investors.
Despite this, Mr Low does believe there is some cause for optimism on the markets and in Europe in general.
He noted news emerging from Europe is that the continent's leaders are getting together to come up with a new game plan to tackle to sovereign debt crisis and establish "some kind of loose fiscal union".
Although the expert was not optimistic regarding the success of such an initiative, he acknowledged it is a step in the right direction and claimed it provides traders and investors with something to be pleased about.
Posted by Greg Secker
- Knowledge to Action News
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