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Spanish Banking Deal Boosts Euro, Asian Stocks, UK And US Futures

The market open across Asia on Monday morning has signalled a positive start to the trading week thanks in part to the 100 billion Euro banking deal for Spain which was agreed on Saturday. The Euro is trading up higher at 1.2630 as traders feel a sense of relief with the fear of bank runs in Spain subsiding. Asian stocks are also surging with the Nikkei currently trading over 2% higher at 8625. The financials are leading the gains with a sector gain of some 2.5%. The Hang Seng is also up by some 2%. As regards the European and US markets, futures are indicating that the optimism will spread west when the markets open later today. The FTSE 100 futures currently trade at 5531 up by 2%, the Dow futures at 12,715 up by 168 points and the S&P futures show a healthy gain of 18 points to trade at 1343.

The optimism has been tempered a little by weaker CPI figures out of China. The 3% level was much lower than anticipated and points to a weakening economy, however, traders are putting a positive spin on the news, claiming that it will give room for more policy easing in the future. The Greek elections also still hang over the markets. Pre-election polls still put the main parties neck and neck as they enter the last full week of campaigning. With luck, next Sunday/Monday will provide some much needed clarity for the markets.

We will have to wait and see how the European banks open up later today, but the shoring up of Spain's banking system should provide welcome relief for German and French banks in particular. The UK banks should also receive a welcome boost.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.