Monday, May 28, 2012

Today's Major Market Move: Greek Stock Market Up 6.9% in Monday's Session

There were two news items to come out of Greece on Monday which resulted in a 6.9% one day boost to Greek Equities.  One event was the disbursement of 18 billion Euros to Greek banks courtesy of the ECB and the other was the improving poll numbers of the pro-bailout New Democracy party. A 6.9% one day gain is nothing to scoff at but Greek equities still have a long ways to go to show any signs of a real recovery. Here's the line chart of the benchmark FTSE/ASE 20 Index going back to the beginning of 2011:

Click here to go to the live chart.
Unfortunately for the rest of Europe there were no collateral gains. Most of the other European equity markets were flat and the Spanish market was down over 2%. Here's some more details on the recent happenings in Spain courtesy of The Times Live:
The premium investors require to hold Spanish government bonds over German counterparts hit a euro-era high at 505 basis points, denoting a lack of confidence in Madrid's efforts to stabilise its finances and ailing banks.
Having dropped to about 4.7% earlier this year, helped by the ECB's creation of a glut of three-year money, 10-year borrowing costs are now approaching 6.5% and closing in on the 7% level widely seen as unsustainable.
Ireland and Portugal were frozen out of capital markets and forced to seek international bailouts soon after their yields topped 7%.
We aren't yet tracking Spanish sovereign interest rates but the next best thing we can do is take a look a the Spanish sovereign 5 year CDS. Not surprisingly, it is also showing signs of stress as the price breaks out to a new high (higher CDS prices = higher perceived default risk).

Click here to go to the live chart.

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