MidSession Review 17/08/12
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August derivative instrument on top European stocks expired at 13-month high, helped by apparent support from German Chancellor Angela Merkel for European Central Bank intervention to calm the euro zone's debt troubles.
The main indexes in Europe were all in positive territory, Stoxx50 gained 0.34% to 2,464.78, German Dax was 0.27% higher, markets were driven today again by the hope that new crisis plans being drawn up by the ECB, and due to be detailed at the start of September, will put a floor under Spain and Italy's troubles and prevent the euro from falling apart. Italian and Spanish benchmarks were again today the top performers respectively up 1.65% at 15,176.59 and 2.08% at 7,571.60.
It's worth to highlight Bankinter and Bankia performances, they rallied more than 4 percent on speculation the European Union will disburse the first instalment of a 100 billion euro bailout facility to Spain's lenders.
Spanish bonds outperformed all their euro-area peers. The 10-year yield has fallen 45 basis points this week, Spanish 2-year yield dropped 21 basis points to 3.77 percent. On the Italian side, the 10-year government bond yield rose 0.64% to 5.83 percent, while the 2-year fell 3.51% to 3.109. Traders are buying the 2-year node, frontrunning the ECB, against selling the 10-year node. German 10-year yields slipped two basis points to 1.51 percent, to give you a comparison with the US Treasury, the rate on similar maturity was 2 basis point lower at 1.82 percent, after reaching 1.86 percent yesterday.
After spending the morning up, the euro finally gave up gains against the dollar to stand at $1.2349. It also hit a six-month against the yen,it was trading at 98.08 Yen or 0.04 higher.
In the commodity space, Platinum jumped as much as 1.4 percent to $1,460.99 an ounce, the highest since July 6, after 34 people were killed at Lomin Plc's Marikana paltinum mine in South Africa, according to the country's police commissioner. Bloomberg reports.
Oil price slipped below $114 a barrel after sources told Reuters the US government was dusting off plans for a possible release of oil reserves.
Gold inched up to $1,617.66 an ounce.
It looks like hopes are well steady on the driver seat, another score for Mr Draghi.September will be a crunch period for the euro zone and its hopes to overcome its debt troubles. September…..delivery time…Mr Draghi.
The ECB is due to flesh out its new bond-buying crisis strategy by September 6, and Germany's constitutional court will deliver a ruling on September 12 on the euro zone's permanent ESM rescue fund, before which Berlin cannot ratify the treaty on it. Dutch elections are held on the same day. And on September 14-15, European Union finance ministers meet in Cyprus. By then, the troika of EU, IMF and ECB inspectors may have also delivered a verdict on Greece's progress in cutting its debt.
Next week will also offer interest. Greek Prime Minister Antonis Samaras will meet Merkel, French President Francois Hollande and Eurogroup chief Jean-Claude Juncker in a bid to secure more funding from the EU, IMF and ECB, despite Greece falling behind on its debt cut targets.
Will these events be able to shake investors hopes, or will they be reinforced??? Delivery time is just few weeks away… Mr Draghi.
Originally posted at www.77sigmatrading.com