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Equities Soar On EU Summit Deal

ByBinary Options Strategy
Published 07/02/2012, 05:09 AM
Updated 05/14/2017, 06:45 AM
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Equities

The EU Summit reached a deal to allow the European Stabilization Mechanism to lend directly to struggling banks, allowing the banks to recapitalize without increasing the country’s debt load. The deal caught the markets by surprise, and sent equities sharply higher across the globe.

In Asia, the Nikkei rallied 1.5% to 9007, the Kospi climbed 1.9% to 1854, and the ASX 200 gained 1.2% to 4095. The Hang Seng surged 2.2% to 19441, and the Shanghai Composite advanced 1.4% to 2225, snapping a 7-day losing streak.

European markets posted outsized gains. The CAC40 jumped 4.8% to 3197, the DAX rallied 4.3% to 6416, and the FTSE gained 1.4% to 5571. Italy’s MIB index surged an incredible 6.6%, as the deal would help stabilize the country’s spiraling debt costs without additional austerity measures.

In the US, the Dow jumped 278 points to 12880, the Nasdaq rallied 3% to 2935, and the S&P 500 climbed 2.5% to 1362. The VIX tumbled 13.3% to 17.08 as investor fear disappeared overnight.

Currencies

The US Dollar tumbled as investors dumped the greenback in a move back to risk. The Australian Dollar jumped 2% to 1.0238, leading the advance. The Euro and Swiss Franc were just behind, rallying 1.8% to 1.2662 and .9484 respectively. The Pound gained 1.3% to 1.5708, and the Canadian Dollar rose 1.6% to 1.0172. The Yen slipped .5% to 79.8165.

Economic Outlook

Friday’s economic reports were mixed, but nobody seemed to notice. Chicago PMI inched up to 52.9 from 52.7, while consumer sentiment unexpectedly dropped to 73.2 from 74.1. Personal spending was flat, and personal income rose .2%, less than the .3% forecast.

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