World stock markets rose sharply Monday, boosted by the European rescue plan (up to 100,000 million) for the Spanish financial sector, which came to shoot at the Place de Madrid almost 6%.
The Ibex-35 index reached 5.93% shortly after the opening, but then eased the gain and, at about 12.15, rose 2.6%. Major European markets also opened with gains: London (1.48%), Paris (2.01%) and Frankfurt (2.12%) and Milan (1.66%).
The banking stocks led the rise in Madrid. Bankia, third Spanish bank by assets and which precipitated the nationalization rescue of Spanish banks, went on to win more than 18% after the opening, and 12.15, rose 9.62%. Santander, the largest Spanish bank, was up 3.96%. BBVA was up 5.05%.
In Asia, markets closed in green also encouraged by the assistance program for the Spanish financial sector. Tokyo stocks ended the session with the benchmark Nikkei up from 1.96% as investors appreciated the strengthening of the euro against the yen, a consequence of the announcement of the plan. Indeed, the euro traded at $ 1.2629, 1.2514 by the Friday before the announcement of the bailout. At the same time we continue to see deterioration in the housing market and property value across Europe. France’s properties for sale continue on the decline month after month with Spain real estate market is having a hard time.
Also oil prices rose. In the debt market, they lowered the rates of ten-year bonds of European countries more fragile. Interest rates in Spain and ten years went by under 6% (5.96%) against 6.19% on Friday afternoon. Those of Italy were placed in 5.6%, against 5.68%. China praised European aid plan to Spain, calling it good for “market confidence”.
“Clearly it was a news that the stock and debt market has liked a lot,” Daniel told Pingarrón, an analyst with brokerage firm IG Markets. “The underpinnings of the Spanish banking sector should serve to prevent a possible spread to Spain and Italy finally, if the conflicting parties to respect the agreements made by Greece to receive the second save made with the power” on Sunday legislative, considered Link Securities analysts said in a statement.
European aid to the Spanish banking sector will result in the stock “the closure of many short positions that were betting on the fall of it” and the risk premium should relax “at substantially reduced Spain needs to go to markets to finance the recapitalization of its banking sector. ”
To reassure investors, the Ministry of Economy and the Spanish Treasury issued a joint statement to reaffirm Spain’s commitment to the program of structural reforms and deficit reduction and its intention to continue financing in the markets.
In announcing on Saturday helping Spanish banks, the Eurogroup, said he was “confident that Spain will meet its deficit reduction commitments and in terms of structural reforms to correct macroeconomic imbalances.”
In the midst of recession and unemployment hit a record high of 24.44%, Spain strives to reduce its public deficit in 2012 to 5.3% of GDP after suffering a very strong deviation from the previous year, it shot up to 8, 9% driven by poor government finances autonomous regions.
The Spanish Treasury said in turn that will continue its funding program, there will be covered after the last issuance of debt, last Thursday, 56.8% of its target for this year, from 86,000 million. Despite a relaxation of borrowing costs to 10 years, interest due to the Spanish debt remained high.
President Mariano Rajoy and his government were also the target of increasing criticism after submission of European aid as a victory and refused to describe it as a rescue that always said they would not ask.
Category: Business News