UK and European markets were in the red throughout the trading day on Monday based on mining and eurozone concerns.
“The markets have had a risk off day at the start of a new week,” said Kathleen Brooks, research director at FOREX.com. “A few things are weighing on sentiment: 1, concerns that Germany will not boost the size of the Eurozone’s bailout fund, 2, Spain – it still hasn’t requested formal bailout funds from the EU/ IMF and 3, more bad news about Germany’s economy.”
Results from the German IFO Index contributed to the downbeat mood. The gauge of German business confidence showed a steeper-than-expected decline for the month of September.
Furthermore, over the weekend, the German publication Der Spiegel reported that Greece needs an additional €20 billion in financial aid on top of what European officials had previously approved. The German government said it has no reliable data about the issue and is waiting for a report next week from the European Commission, European Central Bank, and International Monetary Fund before making any official statement. Greek leaders denied the €20 billion shortfall, but US Treasury prices still increased on the uncertainty.
Meanwhile, the mining sector in London was taking a hit.
“Much of the mining sector weakness in trading has been triggered by a bearish note on the mining sector by bank JP Morgan, who told clients to bank their gains in the sector as stalling global growth continues to bite and likely nullifies the impact of the recently announced Federal Reserve easing measures,” said Joshua Raymond, chief market strategist at City Index.
This all contributed to market declines. The FTSE 100 index lost 14 points, or 0.25%, to close at 5,839. The FTSE 250 index declined by 47 points, or 0.4%, to close at 11,903. The German DAX Index lost 0.5%, while the Paris CAC 40 Index fell by 1.0%.