European Stocks Called Lower, US Debt in Focus
European stocks are expected to open sharply lower on Thursday following a late sell-off on Wall Street.
The FTSE is expected to fall 72 points at the open, Germany’s DAX is predicted to lose 73 points and the CAC 40 in France is called 60 points lower.
Stocks in Europe had finished higher after Ben Bernanke, the chairman of the Federal Reserve, had indicated he was ready to act with more easy money if the economy weakens further.
After the bell on Wednesday, Fitch downgraded Greece further into junk territory, saying there is no new financing program for the country that would be fully funded. The Greek government said the decision was "bewildering".
Following Bernanke’s testimony, Moody’s warned it was putting American debt on review for a possible downgrade if lawmakers fail to increase the US debt ceiling.
Talks on raising the debt ceiling are currently reported to be going badly following clashes between President Obama and the Republican leadership on how to lower the runaway deficit.
The dollar is trading lower in Asian trade despite ongoing fears over the euro zone debt crisis following Greece's downgrade.
On Thursday Italy will attempt to raise up to 5 billion euros ($7.1 billion) in the bond market. Reports indicate discounts to primary dealers will help get the auction away, with the market looking for a bid-to-cover ratio of at least 1.3 as an indication of success.
In a bid to get ahead of the bond market, Italian economy minister Giulio Tremonti said he hoped to sell stakes in state-owned companies to help balance the budget.
Bernanke will be on Capitol Hill for a second round of testimony this afternoon while earnings from JP Morgan , at noon London time, will be in focus.