German Court Rules Favourably

Published by Filipe R. Costa on Wed, 12/09/2012 - 10:35
euro rescue fund

Daily Market Commentary for September 12: The Germany’s Constitutional Court approved the ratification of the ESM bailout fund as widely expected by the market. Nevertheless equities edged higher after the ruling was known earlier this morning.

Germany has green light to be part of the bailout fund as long as any future increase in its liability be first submitted to the German parliament for approval. The news is certainly good as any unfavourable decision by the Germany’s Constitutional Court would undermine the recent steps taken to fight the debt crisis. The first serious risk event for the week has been surpassed now and all eyes will be directed to Ben Bernanke and FOMC meeting decisions to be announced tomorrow.

Equities have been moving higher with the S&P 500 closing at 1,433 a level not seen since January 3, 2008. Investors are becoming less risk averse and jumping into equities but we prefer to be careful as the second risk event for the week may ignite a sell-off. For now it is difficult and senseless to short equities against this bullish tendency but maybe tomorrow after FED’s announcement (or lack of it) may be still in time. Gold is expected to retract substantially if the FED doesn’t deliver.

Name Last price Close Price % 5-Day % YTD %
CAC 40 11/09/2012 3537.3 0.89 4.07 11.95
Crude oil (Light Sweet) Composite 11/09/2012 9678 0.52 1.47 -2.24
DAX (Xetra) 11/09/2012 7310.11 1.34 5.45 23.93
Dow Jones Industrial Average 11/09/2012 13323.4 0.52 2.21 9.05
EUR/GBP - £ per Euro 11/09/2012 0.7996 0.03 1.2 -4.03
EUR/USD - US$ per Euro 11/09/2012 1.2852 0.43 2.54 -0.79
FTSE 100 11/09/2012 5792.19 -0.02 2.12 3.95
FTSE MIB 11/09/2012 16226.75 0.84 6.6 7.53
GBP/USD - US $ per £ 11/09/2012 1.6072 0.4 1.3 3.49
Gold (LBM) $ 11/09/2012 173340 0.12 2.39 10.63
IBEX 35 11/09/2012 7930.4 0.93 5.91 -7.42
Nasdaq 100 Index 11/09/2012 2784.89 -0.12 0.46 22.26
Nikkei 225 11/09/2012 8807.5 -0.7 0.36 4.17
S&P 500 11/09/2012 1433.56 0.31 2.04 13.99