At a time when the British newspaper industry is under attack from allegations of phone hacking and declining revenues, its power to move markets seems to be as high as ever—even in newspapers not exactly famed for their business reporting.
On Tuesday afternoon, a report published on the Guardian website claiming that France and Germany have finally reached an agreement on a hike in the value of the European Financial Stability Facility (EFSF) caused consternation in the markets.
The story, by the left-leaning newspaper's veteran Brussels-based European correspondent David Gow, cited EU diplomats as saying that a "comprehensive plan" was close. Other news outlets, including Dow Jones, shot down the story.
Whether it is accurate or not, the story's power to move markets is interesting. The days when traders would only trust specialist business-focused news organs such as the Financial Times and the Wall Street Journal are over.
This was seen earlier in the summer, when a report in the Mail on Sunday, the weekly sister paper of the Daily Mail and part of DMGT, sent shares of Societe Generale into freefall when the paper said the French bank was in a "perilous" state.
The story was hotly denied by Societe Generale chief executive Frederic Oudeain an interview with CNBC, and the Mail on Sunday was forced to issue an apology. However, continuing worries about the state of French banks mean that the bank's share price has still not recovered to the levels it was trading at before the report.
The Mail on Sunday is known more for celebrity gossip than its business reporting, just as the Guardian is better known for investigations into issues such as phone hacking at News Corp's News of the World tabloid. The British media, particularly its tabloid press, is famed around the world for its relative aggression and lack of respect for authority. This may change if tighter regulation is imposed in the wake of the phone hacking scandal.
So why are traders listening to them rather than the more sober, business-specific news outlets?
One factor that gives these reports a huge amount of power is, of course, the Internet, which means that reports can be read and passed on within seconds by more and more people globally.
While twenty years ago a trader reading a report in a British newspaper would have to pick up the phone and call one person in his bank's New York office, now he can cut and paste a link into an email to his entire trading floor, hit send, and spread the news to thousands.
This has also helped create what Birinyi Associates dubbed the "FT effect" after a series of stories, often on the FT website, published in the late afternoon, were followed by market volatility.
"Since the beginning of September, on nine out of the ten days with the most volatile final hour of trading there has been a news story published on the European debt crisis in the late afternoon," analyst Kevin Pleines wrote.
The power of these stories to move markets also demonstrates just how sensitive markets are at the moment.
"Markets are extremely sensitive to everything about the European debt crisis," John M. Hydeskov, chief analyst at Danske Markets, told CNBC Wednesday. "These kinds of rumors have an especially big impact, and if they come out with these stories, they will sell a lot of newspapers."
The growing power of the Internet also means that British newspapers are suffering from declining sales, together with a recession-led decline in advertising revenues, and may need to shout louder to make themselves heard.