The Euro crisis receives another blow: S&P re-evaluates the rankings of European countries – Part 2

France came down from AAA rating to AA+ while Italy and Spain’s ratings were down two notches, reading even worst news from France. Austria was cut to AA+ from AAA; Cyprus to BB+ from BBB; Italy to BBB+ from A; Malta to A- from A; Portugal to BB from BBB-; the Slovak Republic to A from A+; Slovenia to A+ from AA-; and Spain to A from AA-. S&P left the AAA ratings of Germany, Finland, Luxembourg and the Netherlands unchanged.

S&P further revealed on Friday that the status of France and the likes is likely to go further down next year and most probably the year after.

The only financial institute that managed to avoid S&P’s feud was European Central Bank. According to the auditing organization, ECB did take some actions that were pre-emptive and proactive in nature and avoided the worst case scenarios in several countries. Its policy of keeping the flow of money to commercial banks kept the borrowing running at levels of corporations and privately owned enterprises.

These measures taken by ECB kept confidence survive in the market. The diminutive consumption in the Eurozone markets, that still can be seen, is because of the instruments used by the central bank.

However, the commercial and investment banks showed lesser confidence in the region. The banks slumped Friday, with JPMorgan losing 2.5%, but the major U.S. averages finished off the day’s lows as the Dow Jones industrial average lost 49 points to 12,422, the S&P 500 6 points to 1,289 and the Nasdaq 14 points to 2,711.

The Euro showed similar response to the situation. The continental currency traded at $1.2683, down from $1.2814 as of the end-of-day on Friday.

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Posted by Usman Khalid on Jan 14 2012. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.