European equity markets saw a drop on Wednesday as optimism over a further Federal Reserve monetary injection faded and investors became more fearful over Spain’s finances. This could fuel more profit-taking in european markets.
Spain is set to unveil a budget including savings of circa 20 Billion Euros. This will have to be achieved without raising income tax or value added tax (as agreed by Spanish officials). Without a QE3 in the US, the markets are expected to be volatile.
The outcome is unclear and the potential drop in markets may be short-lived but will be dependent on sentiment, momentum and further news throughout the Eurozone and broader markets.
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