European markets shrugged off financial setbacks in Hungary and Ireland yesterday in a sign of investor confidence returning to the eurozone.
Hungary's failure to agree a fiscal strategy with the International Monetary Fund and the European Union and a downgrade of Irish debt would have put European financial markets under severe strain had they occurred two months ago, analysts said. Yet markets hardly flinched at the news, with negative reaction mostly contained in Hungary and Ireland.
Nick Matthews, economist at RBS, said: “If you were to go back two months, this kind of news would have sent eurozone peripheral bond yields higher and pressured the euro. There is a lot more confidence in Europe now.” The euro remained around a two-month high against the US dollar, while Europe's bond and equity markets did not budge on the news.