Courtesy of John Nyaradi.
courtesy NASA
Global stock markets blast off on relief over European debt solution
After a dramatic 11th hour agreement in Europe to defuse the Greek debt crisis, the Dow Jones Industrials (AMEX:DIA) responded with a dynamic 339 point gain and all other major indexes followed suit.
Even more impressive performance was logged by the all-important Financial Sector (AMEX:XLF) which soared +5.9% as Bank of America (NYSE:BAC) gained +9.6% and JP Morgan (NYSE:JPM) climbed +8.3%.
The euphoria was generated by an eleventh hour solution in Europe which called for recapitalization of European banks, a leveraged increase of the European Financial Stability Facility (EFSF) and a “haircut” of 50% for private holders of Greek debt. The moves were well taken on the continent as the iShares Europe 350 (AMEX:IEV) gapped higher by 5.9%.
While markets cheered the resolution, many analysts suggest that today’s agreement buys Greece and the Euro Zone some time but does not resolve the underlying problem of too much debt across its member nations.
In news at home, weekly unemployment claims came in above 400,000 yet again, and GDP was revised upwards to +2.3 from a previous estimate of +1.3 as the economy continues to muddle along.
The Dow Jones Industrials (AMEX:DIA) is on track for its best month since 1987 and reclaimed its 200 Day Moving Average and now stands at a three month high.
Bottom line: For now, at least, we have some stability in Europe and with seasonality and technical indicators now positive, we likely can expect higher prices ahead over the medium term.
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