EU-leiders zwijgen over Spanje maar financiële markten zijn onrustig (en)
EUOBSERVER / BRUSSELS - EU leaders at a summit in Brussels on Thursday (17 June) are keen to avoid the question of Spain, but financial markets are poised to react to anything - including a "no comment" - coming out of the event.
"The markets will still be trading. They will certainly immediately scrutinise every bit of information and there will definitely be a response," Stefan Schneider, Deutsche Bank's Frankfurt-based chief international economist told EUobserver. "You will see movements on the euro/dollar exchange, government bonds, CDS [Credit Default Swaps] and equity markets as well."
EU leaders are due to give their final press conferences at around 5pm Brussels time.
The Deutsche Bank expert said traders will be watching Reuters i and Bloomberg feeds on their computer screens, as well as logging on to the EU's own real-time internet broadcast of the main press conference in Brussels.
Financial newswires file headlines live from the audience chamber in the EU building as leaders speak, with the messages popping up instantly on hundreds of thousands of traders' screens around the world.
Deutsche Bank's Mr Schneider explained that a positive statement, indicating that Spain will not need a bail-out, may not see a positive reaction if traders fear that EU leaders are trying to buy time and will do a u-turn down the line, as earlier with Greece.
"It depends how convincing they are," he said.
Statements along the line of "there is uncertainty and we are monitoring the situation" will be seen as a hint that a bail-out is in the pipeline. Any statement that bail-out talks are really under way would see a crash in confidence in Spain.
"Then you really would need a bail-out," he noted.
If the leaders try to wriggle out of Spain-related questions in their press briefings, this could also be seen as bad news. "A 'no comment' would add to the uncertainty. If they keep quiet then it's a statement that there's no good news," Mr Schneider said. "This would not be a professional strategy."
The reason for the hair-trigger approach to the EU event is that traders are genuinely uncertain about Spain's financial future. If markets had an internal consensus on the likely scenario and felt they "knew better" than politicians, the EU leaders' remarks would have less impact.
EU leaders heading into the summit attempted to bat away Spain queries, saying the purpose of the meeting is to discuss the EU's new 10 year growth plan and ideas on joint economic governance.
High-level EU officials have in recent days referred to as "rubbish" claims by leading newspapers such as Spain's El Economista and Germany's Frankfurter Allgemeine Zeitung that an EU or IMF i bail out is coming for what is the eurozone's fifth largest economy.