By: DailyForex.com
The EU may have voted to inject up to 100 billion euros into Spanish banks, but the increase in Spanish and Italian bond yields on Monday indicates that investors still doubt the success of the Spanish bailout plan. Several members of the US Federal Reserve expressed a similar sentiment, but the jury is still out as to whether the group’s policy committee, which is set to meet on June 19-20, will share these doubts.
In Asian trading, stock prices plummeted, indicating further concern that the proposed Spanish bailout will do little to thwart the region’s burgeoning economic crisis. The MSCI Asia Pacific Index (MXAP) fell 0.9 percent to 112.46 as of 12:42 a.m. in Tokyo, with over four shares dropping in price for every one that gained. The Nikkei 225 Stock Average dropped 1 percent, while Australia’s SP/ASX 200 Index gained 0.4 percent.
What’s Next?
The highly anticipated Greek election of June 17 will not only determine the country’s new leader, but will also influence whether or not the country remains in the EU or is forced to withdraw, a decision which also has analysts on edge. With only five days remaining until the election, investors remain nervous about what lies ahead.
Last week, Fed Chairman Ben Bernanke announced his willingness to protect the US economy in the event that the Eurozone crisis is further exacerbated, though his specific plan was not unveiled nor were the dates of his theoretical intervention. This lack of clarity did little other than to fuel additional speculation and concerns over future monetary easing policies, which surely won’t be unveiled until after the June 17 election, thus leaving the market vulnerable in the coming days.
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