Last evening S&P futures were looking weak, down to the tune of nearly 10 points, as S&P surprised everyone with a downgrade of Italy. The country has been under review by Moody’s, so that was seen as where the downgrade would be coming from – instead S&P jumped in first. Either way, the half life of the news was measured in hours as Greece seems to be the only focus at the moment. With European markets doing almost a complete 180 of their performance yesterday, futures are now up nearly 10 points instead of down 10 points. Another healthy day of headline driven markets, and gapping up and down.
Remember there is another teleconference later today between Greece and the “troika” (ECB, EU, IMF) so I guess we have to prepare for a late day rally on the ‘constructive talks’. Upside remains S&P 1217ish, which is the 50 day moving average. We shall see tomorrow if the announcement of Operation Twist elicits the same Pavlov dog “buy buy buy” reaction, to finally get us through resistance.
- Markets are fairly hopeful that Greece will do enough to get its hands on the money and avoid a default that could plunge Europe’s banking system into turmoil. Stocks across Europe and the euro were trading higher, brushing aside the latest downgrade of Italy’s credit rating downgrade from Standard & Poor’s and a survey of German investor confidence showing Europe’s largest economy slowing down sharply.
- “Last night’s conference call between the troika and the Greek government ended with an air of optimism about it, with reports of some sort of deal being close,” said Michael Hewson, markets analyst at CMC Markets.