Spain’s falling GDP coincides with downgrades of 16 Spanish banks by S&P

Spain’s National Statistics Institute announced that the nation’s GDP declined by 0.30% during the first quarter of 2012.  Because this was the second consecutive quarter of economic decline, Spain is now officially in recession for the second time since 2009.  Economists had anticipated a more significant decline of 0.4%, possibly explaining why Spain’s ten-year bond yield  declined by 0.79% on Monday to 5.83.  Spain’s IBEX 35 Index fell by 1.04% to 7,071 as 16 of the nation’s banks were downgraded by Standard & Poor’s (NYSEARCA:EWP).

European stock indices declined as concerns over the sovereign debt crisis were re-ignited.  Germany’s stock declines were mitigated following an announcement from the nation’s Federal Statistics Office that March retail sales rose by 0.8 percent (NYSEARCA:EWG).

In China, stocks advanced as the nation reported an unexpected trade surplus in March as imports decreased more than expected.  China’s first quarter GDP rose to 8.1 surpassing the 7.5 percent target.  The Shanghai Exchange was closed on Monday.  Hong Kong’s Hang Seng Index advanced by 1.70% to 21,094 (NYSEARCA:EWH).

As of 8:31 EDT, the Euro STOXX 50 Index declined by 1.02% to 2,320 (NYSEARCA:VGK).  The FTSE 100 dropped by 0.49% to 5,748 (NYSEARCA:EWU).  The German DAX Index declined by 0.33% to 6,779 (NYSEARCA:EWG).

The euro declined against the dollar by 0.23% trading at $1.3224 (NYSEARCA:FXE).

American stock index futures were in negative territory as a result of the bad news from Spain.  The June 12 Dow Jones Industrials future declined by 0.17% to 13,141 as of 8:39 EDT.  The June 12 S&P 500 future fell by 0.29% to 1,394 (NYSEARCA:SPY).  The June 12 Nasdaq 100 future declined by 0.37% to 2,726.

June futures for Brent Crude Oil declined by 56 cents to $119.27/bbl. (NYSEARCA:USO)

June gold futures declined by 1.70 percent to $1,663.10 per ounce (NYSEARCA:GLD)

Bottom line: Spain’s continuing economic troubles re-ignite concerns over the European sovereign debt crisis . 

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About John Nyaradi (http://www.wallstreetsectorselector.com) John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.