Fitch, Inc., the International ratings agency downgraded Spain's long-term foreign and local currency Issuer Default Ratings (IDRs) to 'AA+' from 'AAA', caused a massive sell-off of equities and a sharp decline in the euro.
Fitch cited an inflexible labor market and a restructuring of regional and local savings banks as hindrances to the pace of adjustment.
"This should exacerbate the tremendous volatility we've seen in global stocks as the world wrestles with the idea of a debt-based collapse," said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California. "Adding to this is the fact that no one wants to be long over a holiday weekend."
The release in the drop of Spain's credit rating fueled investor fear in an already emotionally driven market. Those who are able to control their emotion and not allow it to control their trading decisions are remaining profitable in the current economic climate.
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