The uncertain future for French banks has lead to spreading rumours that France is in real danger of losing its triple-A credit rating. The FTSE 100 again lost some value as weaker banks pulled the entire index down due to the news.
Moody, Fitch and S&P all confirm France will keep triple A rating
Credit rating firms Moody’s Investors Service, Fitch and Standard & Poor’s all confirmed that France will keep their top credit rating. However, this confirmation has not settled markets and the worry regarding the credit rating has caused shares to drop in price.
These rumours have been denied by a Societe Generale spokeswoman who has confirmed the countries financial stability. The news has had adverse affect on Societe Generale shares which have fallen by 14.7%, and the United States banks where reeling as they witnessed their largest one-day drop since the spring of 2009. Of the UK banks Barclays was the worst hit and it realised a drop of nearly 9%.
Joe Rundle, head of trading at ETX Capital has said: “There’s chatter that France may be downgraded this evening which has obviously hit all the banks very hard. The French banks are really really poor but it’s locked onto our banks as well.”
Rumour is the worst at making prices fluctuate
The fact that French and UK banks are linked is not a good sign as traditionally rumour is the worst when it comes to making share prices fluctuate and any negative news will have a horrible affect on UK share prices.
Not all shares were negatively affected, Standard Life saw an increase of nearly 6%, Man Group also increased by just over 3%, Weir Group also rose by about 2% as the engineer got an upgrade from Goldman Sachs.
Gold also hit a record high this week and this has been confirmed by Randgold Resources who have seen their share price increase by more than 4%. However mining stocks are suffering with less demand for copper, with Kazakhmys falling by 8%.