Stocks were up today on the back of news that European leaders are attempting to save the Greece Relief Plan. Compounding this was good news from the business sector, with strong corporate earnings being released. The Dow Jones is currently up 127 points or 1.1%. This follows a fall of 573 points over the last two days. The recent drop in stock prices was due to the bankruptcy of MF Global which collapsed after a failed bet on European debt. Also pulling down prices was the news that the Greek Prime Minister would be putting the relief plan to a public referendum. Today that referendum is less likely as a revolt in the Greece government could possibly sink any referendum and thus ensuring the bail out plan stays on track.
Also helping prices was the news that hiring numbers were up. For the month of October company payrolls increased by 110,000. This was a better than expected figure. Investors are hoping that the government’s broader employment report will support these figures.
Banks have been some of the hardest hit stocks of the last couple of days. Today saw them regain some ground with Bank of America up 2.6% which was the biggest gain for the Dow 30 stocks. Mastercard was also up 6.8% after news of good quarterly earnings. Smaller stocks were also up with the Russell 2000 increasing by 1.4%.
Stocks in Europe where up ending a three day run of falls. Big risers included Randgold Resources Ltd which hit record heights after announcing a 22 percent forecast increase in gold output for next year. Another resource company Rio Tinto was also up 3.8 percent, this lead a broader rally of other stocks in the commodity sector. The Stoxx Europe 600 was also up 0.9 percent after a highly volatile trading session. Investors see good news that the ring fencing of Greece continues, and hopes that the problems can be isolated to that country.
In related news Greek Prime Minister Papandreou was summoned to Cannes where the Group 20 summit is about to be held. There he will be under strong pressure to accept the proposed relief plan. There is also the possibility that other European leaders will not wait for Greece to accept the bailout plan and will continue with plans to strengthen the euro zone without it. The Stoxx 600 fell at one point during the day after it was reported that the European Financial Stability Facility will be delaying its $3 billion euro bond sale because of bad market conditions.
Shares in Asia performed less well with most of the Asian stock markets dropping on Wednesday. Worst hit was Tokyo which is at a three week low. The Nikkei Stock average was down 2.1% for the day. Other Asian stock markets followed suit with the South Korean Kospi Composite off 0.8% and Hong Kong’s Hang Seng index falling 0.9%. The Australian S&P/ASX 200 also showed big drops with a 2.0% loss for the day.
In currency news the euro moved up against the dollar awaiting news of the U.S Federal Reserve policy statement. The Euro received some support on the back of rumours that China would offer funds to the European Financial Stability Facility. This news overshadowed poor economic data that showed manufacturing activity had contracted for the euro zone and that German unemployment figures were up.