European markets enjoyed a huge rebound today. In some cases, double digit percentage gains. During the past week, "I argued" that Europe had to work out a unified and coordinated fiscal response to the banking crisis in order for its stock markets to regain relative strength compared to their US counterparts.
Today, European governments pledged €1.8 trillion (roughly $2.2 trillion) to support troubled banks and dwarfed the $700 billion Paulson plan. As a result, the relative gap between the underperforming Eurostoxx and the outperforming S&P500 has now been almost erased.
In the meantime, what will happen to the Euro? More analysis tomorrow.
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