Further woes are resting upon the euro, as Spain was downgraded by Moody’s and given a negative outlook. This may mean more of a struggle for Spain’s banking system and the related exchange traded fund (ETF). [Pain In Spain ETF Starting To Heal.]
Although sovereign demand and technical support buffered the euro against more intraday losses late in the week, there may be more trouble ahead for the euro zone countries, according to Reuters. Charles Plenty and Emma Ross Thomas for Bloomberg reports that Spanish banks are in need of 15 billion euros, or $21 billion, to convince investors that battered balance sheets are not a threat.
Spain’s banking industry will need more investment than imagined before to shore up the sector and help regain the confidence of the public. The ETF iShares MSCI Spain (NYSEArca: EWP) is looking weak as the banking sector is 41% of EWP, so its performance and overall health are key to how this ETF weathers the storm.[Spain ETF: Why The Banks Matter.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.