Strong volatility on the international markets last month led to accumulated losses on the Lisbon Stock Market since January of 16 per cent.
In the same month, both the Lisbon and Madrid stock markets registered their greatest daily gains and losses for the decade.
By May 18, pessimist economists in America were warning that a ‘major crash’ was likely and that US investors should ‘sell major stocks’.
Falls registered an overall 4.5 per cent fall in May on the Lisbon PSI 20 and 15.6 per cent on the Athens General Stock Market.
Since January, the Greek stock market, which has been at the centre of the financial storm, suffered accumulated losses of 28.2 per cent.
Madrid’s IBEX 35 lost 10.1 per cent off the value of shares while the Paris CAC 40 lost an average of 7.9 per cent for the month.
London’s FTSE 100 saw 6.5 per cent wiped of the value of its company shares while the United States three main stock markets (S&P 500, Nasdaq 100 and Dow Jones) lost between 7.2 and 7.6 per cent. Only the German DAX succeeded in limiting losses to a modest 3 per cent.
The result of this market turbulence provoked over the Athens Crisis, European public debt concerns, fears for the survival of the Euro and worries that the world could enter a fresh recession, caused the Euro to plunge against the dollar and the interest rate costs for servicing public debt to go through the roof.
Other contributory factors on the international scene included tensions between North and South Korea, the BP oil spill in the United States and fresh downgrades on Spain’s credit rating.
The May crisis also made it costly and difficult for Portuguese banks to obtain credit at reasonable rates on the international money lending markets.
More recently the markets are jittery that tough austerity plans launched by London, Lisbon, Madrid, Paris and Berlin could have a strong negative impact on consumer spending and economic growth.
The markets started showing signs of deterioration in early April including a shrinking number of stocks reaching 52-week highs and falling stocks outnumbering rising ones.
Ratings agencies downgrades of Greece, Spain and Portugal’s sovereign debt helped trigger the decline as the prospect of default in Southern Europe undermined investor confidence and led to the largest European Union/IMF bail-out (145 billion euros) in recent history for Greece. Chris Graeme
