Investment - Articles - Investors take flight as Euro rot continues

 Mike McCudden, Head of Retail Derivatives at Interactive Investor (www.iii.co.uk), gives his thoughts on the trading week so far:

 "So the rot continues - and equity markets are in the mood to break records. General volumes have been low throughout the week, and with Thanksgiving in the States not helping it's been pretty plain sailing for bears in their pursuit of lower lows. However, Interactive Investor retail volumes have been good this week and from where I sit I hear cries to our dealers for the likes of Thomas Cook and the banks who, although increasingly under the cosh, are seeing speculative interest at these levels.

 "With the US incapable of agreeing how to deal with its debt mountain, and Eurozone contagion racing through the bond markets, the current picture is hardly rosy. Add to that flash PMI from key global powerhouse China showing contraction, investors taking flight from the Euro, risk surveys in the UK showing a shocking lack of confidence in the banking system.... the list goes on as we search for glimmers of hope.

 "Eurobonds, which make sense for the peripheral Eurozone nations, appear to be the only answer the markets will accept. But they are proving a difficult pill for Merkel to swallow in front of the German public, especially as they could threaten Germany's AAA rating. If Merkel continually refuses to take her medicine, the rot will continue - ECB bond purchasing is now being reigned in, and the ability of the EFSF to be leveraged up to the trillion Euro mark is looking highly unlikely. Eurobonds are looking like the last throw of the dice.

 "With global market weakness persisting, and a realistic fear of Credit Crunch 2 stemming from the Eurozone now on the cards, it is no wonder many buyers are taking flight."