Equity markets trembled yesterday as Greek ministers rejected another restructuring offer from private sector creditors. Investor concern led to further contagion across other troubled peripheral countries yesterday as their borrowing costs jumped higher once more; fears that Portugal will also be required to restructure its debt sent their 10-bond yields above 14%, whilst credit default swaps hit record highs. A brighter note came from the Eurozone purchasing managers index, the survey climbed above 50, indicating the region has breached expansionary territory for the first time since last August.The Governor of the Bank of England provided his strongest signal yet that he expects a further round of quantitative easing during a speech on Tuesday. Mr King cited that whilst financial markets started the year in positive fashion, his outlook for economic growth remained bleak as households continued to pay down debt. The Bank had further scope to hold interest rates at current lows also to extend the asset purchase programme through printing more money due to a prolonged period of low wage growth and inflation continuing to fall back;
Financial stocks dragged the index lower on Tuesday as banking stocks ended their recent 10 day rally with the FTSE 100 declining 30 points to finish the session at 5,751. Concerns over a Greek default and fears of weak fourth quarter results prompted some investors to take some profits across the sector; Lloyds Banking Group and RBS were the largest fallers, easing 2.8% and 3.9% respectively on the day. US markets provided more positive news; Apple’s after-market trading update showed the group sales during the last quarter smashed both analyst and internal expectations. Record Iphone and Ipad sales powered quarterly revenues to $46.3 billion with earnings per share of $13.87 – 49% higher than management’s own $9.30 EPS guidance. Shares in the Silicon Valley group surged 10% in after-hours trading before slipping back slightly to $450.91 a share.
