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Upside Surprise from E.U. Summit Gets Bulls Rallying
29 Jun. 2012
Category: General
At long last, the E.U. Summit has yielded an outcome that could actually help improve the crisis situation there. It was reported that after a late night session, the E.U. leadership has agreed that a common supervisory body would be created which would oversee the Eurozone’s many banks. More importantly, especially for Spain and other highly indebted sovereign states, funds from the European Stability Mechanism will be funneled through the supervisory body directly to the banks in need, effectively bypassing the respective governments’ balance sheet. Spain and Italy had essentially issued an ultimatum to the E.U. Summit members and used as a bargaining chip their agreement to a proposed growth package in exchange for this key accord.
Further, it was agreed that the nations who utilize the funds from the bailout account will not be compelled to comply with budget rules that had previously called for the adoption of additional economic reforms or austerity measures.
These steps to alleviate the crisis in the long term are hoped to have an immediate impact on borrowing costs for Spain and Italy, which have risen in recent days to uncomfortable levels. According to Mario Monti, the Italian Prime Minister, E.U. states that request support from the bailout funs would be required to sign off on a Memorandum of Understanding which would define their existing commitments and set a timetable for repayment of the new funds, but they would not be subjected to “troika” oversight.
While the official announcement of the supervisory body won’t be made until later today, investors are already rallying on the positive news that no one had expected. Investors are rallying, both on major European equities and the Euro. Moments after the markets’ opening, the German DAX surged 158 points or 2.57%, and the French CAC40 was 89 points higher or 2.91%. Despite the rally, sentiment on the DAX is primarily bearish, however, as investors weigh how the positive outcome might affect the ECB’s decision to take a more dovish stance at their meeting next week. OpenBook trader alpenland from Switzerland has improved his standings and now has 3 followers and 1 copier. The trader closed a number of short positions in the DAX with profits that ranged from 12.43% to 25.53%; meanwhile a long position in the DAX had a 67.73% profit while another in the CAC40 had a 29.86% gain.
The Euro surged by more than 1% against the U.S. Dollar and is currently trading at 1.2585 while OpenBook sentiment is bullish with 63% buying as compared to 37% selling. OpenBook trader term6849 from the U.K. closed a pair of short positions in the EUR/USD with a gain of 3.92% and 27.50%; the trader has several open positions in the pair which are also in the green.
OpenBook guru thesizzle had some significant returns which surely made his 802 copiers very happy; a pair of short positions which closed a few hours ago had gains of 152% and 107% and one previously closed short had a 200.83% gain. For the last week, the guru had made a profit of 28.5% and for the month it was at 39%, at three months it was at 132.1% and for the longer periods was higher than 300% profit. The guru has three open shorts which are in the green and are targeting 1.22.
Read all about Forex news, stock market analysis and special trading insights at eToro’s blog, the leading online trading blog.
etoro.com/blog
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