Financial markets retreated as concerns over sovereign debt problems in the Eurozone re-emerged. Germany and France remained divided regarding establishment of a common banking supervision framework. It also appeared that Germany has got impatient with Spain. Tax revenue in Portugal dropped -2.4% in first 8 months of the year when compared to the same period last year, the government is struggling to find new measures to reach the budget deficit target of 4.5%. Wall Street opened with the above pressure in the Eurozone. Despite recovery later in the day, the bourses were still weighed down by reports that Apple Inc had sold 5 million iPhone 5s in the first 3 days, compared with expectations of up to 10 million units. In the commodity sector, the front-month contract for WTI crude oil fell -1.03% while the Brent crude contract slid -1.44%. Gold also retreated after soaring to as high as 1790 last Friday with the benchmark Comex contract losing -0.75%.
Germany and France remained divided on when to introduce a banking union for the bloc. It’s reported that German Chancellor Angela Merkel rejected French President Francois Hollande’s idea of "the earlier, the better." The disagreement may continue to drag on until next year. Meanwhile, Germany appeared to have got more and more impatient with Spain with a government official stating that Spanish Prime Minister Mariano Rajoy should "stop prevaricating and decide whether Spain needs a full rescue". Michael Meister, finance spokesman for Merkel’s Christian Democratic Union, urged Rajoy to "spell out what the situation is". He also said that "Rajoy evidently has a communications problem. If he needs help he must say so".
The latest data showed that Portugal’s tax revenue dropped -2.4% in first 8 months of the year, compared to the same period last year, due to unemployment. Prime Minister Pedro Passos Coelho said he is ready to announce a new proposal to increase workers' social security contributions while cutting corporate taxes. He stated that in order to meet the budget target, "income tax will be the main way of achieving it". However, this has triggered a lot of dissatisfaction and protests were seen on the street.
On the dataflow, Germany’s IFO indices for September were disappointing. The business climate index slipped to 101.4 in September from 102.3 a month ago. The market had anticipated it to have improved to 102.5. The current assessment index fell 110.3 in September from a downwardly revised 111.1 in the prior month while the expectations index dropped from 94.2 to 93.2 during the month.
Oil and Gold Reports contributed by Oil N' Gold