Global markets closed in the red for the week all thank to the same old reason. European debt crisis and US deficit issue. Ironically, that was the same issue that started to sink the global stock markets since June.
Since last month a small positive step has been made by EU leaders to stem out the EU debt crisis, nothing much has been done to follow through the good work. Instead more problems surfaced since then. Both Greek and Italian needed a change of leadership in Parliament while bond yields in Greece, Italy, Spain and France rose as investors feared of the debt issue will get worse despite the small positive step last month. Well can't really blame the investors for that as basically EU leaders still can't have any political consensus in providing the next step to resolve the crisis. Last month agreement of enlarging the EFSF has yet to announce any technical detail of how, where and when the EFSF funds can actually start to work. That is definitely worrisome to investors. Investors are getting impatience will the EU leaders presently to resolve the issue soonest possible.
Next US deficit issue first surfaced in August due to political deadlock ( which eventually did agree to hike the debt ceiling at the 11th hour ) resulting in US Government rating being downgraded now has just days for the super committee to agree on how and what is the plan to reduce the deficit. Again political deadlock prevented a straight answer. Investors would not want the August saga to re-enacted.
Stock markets are getting all the volatility from these 2 issues and as long as they still hanging around without fast action from the leaders, the volatility will still be there.
