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Stocks Extend Longest Drop Since 2008 on Debt

Stephen Kirkl and Shiyin Chen
Bloomberg [1]
Friday, November 25, 2011

Stocks fell for a 10th day, the longest losing streak since July 2008, and the euro extended losses as the burden of government debt grew around the world. The cost of insuring European sovereign bonds against default rose to a record.

The MSCI All-Country World Index sank 0.6 percent at 6:15 a.m. inNew York [2]. Standard & Poor’s 500 futures slid 0.7 percent, signaling the index will drop for a seventh day when U.S. markets resume trading after the Thanksgiving break. The euro depreciated 0.7 percent to $1.3253, set for a fourth weekly decline. Hungary’s five-year yield climbed to a two-year high, while Japan’s 10-year yield [3] rose above 1 percent for the first time in more than three weeks. The Markit iTraxx SovX Western Europe [4] Index of credit-default swaps on 15 governments climbed four basis points to an all-time high of 384.5.

European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo urged euro-area politicians to take bold steps toward fiscal union to end the debt crisis, and said they should not rely on the ECB. European Union Economic and Monetary Affairs Commissioner Olli Rehn [5] said it looks like contagion is spreading to core countries. Moody’s Investors Service cut Hungary’s debt to junk after S&P said yesterday Japan hasn’t made progress in tackling its debt load.

“We need to see more action out of Europe before any sort of rebound happens,” Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. “Greece [6], Ireland, Portugal [7] are becoming after-thoughts as the crisis is now unfolding at the footsteps of Italy, France [8] and Germany [9]. These are the larger countries and these would have the largest knock-on effects.”

Full story here. [1]