The top share prices dropped again last Monday following on from the drop the previous week. This was because of a weakness in commodity stocks and banks which made the urge for riskier assets wane because of the Euro zone debt and global growth worries. This came just ahead of the summit of European leaders. The FTSE 100 was down half a percent dropping below the 5,500 point level yet again to 5,489 points.
The UK blue chip index closed last Friday one percent lower. Germany agreed last Friday to a E130 billion plan to try and boost growth. This was at a meeting of German, French, Spanish and Italian leaders but they failed to agree on a better use of Europe’s rescue funds ahead of the big meeting this week.
At the big meeting, the leaders hope to make steps towards a cross-border banking union, a debt redemption fund and closer fiscal integration. Pressure is building up to find a resolution according to Rebecca O’Keefe, Head of Investment at Interactive Investor.
She also said that the European leaders will probably back a E130 billion growth package but that may be all as Germany are still against common debt issuance and different use of the bail-out funds. JP Morgan said in an equity strategy note that they are underweight, still, on cyclical stocks.
These are stocks such as energy, banks and miners stocks. And this was despite them, since the first quarter, having seen a fifteen percent under-performance in Europe. There were rising structural concerns about slower emerging markets and China where the predicted ‘soft landing’ may not happen.