Rumours of German Court Approval for ESM Boosts UK 100 Spread Betting Market
The UK 100 has recovered some of its form this morning, after a very slow start, helped by a swirl of rumours around a German court decision.
It is rare that a group of quiet, educated lawyers in Germany cause noticeable market movements, but today is one of those days.
The UK 100 struggled for headway earlier this morning, but was able to move firmly into positive territory on rumours that the German constitutional court would approve the European Stability Mechanism (ESM).
The financial spread betting markets had feared that the court would strike down the ESM as unconstitutional, leaving what little plans the EU has to contain the crisis in disarray.
Spanish ten-year bond yields have dropped back from nearly 7%, and the US 500 futures market has been jolted from its torpor.
However, even if the court does approve the measure, the ESM still has insufficient firepower to rescue both Spain and Italy.
Last year the German court opted not to rule that the Greek bailout was in violation of the German constitution, causing a short-lived rally. However, it is going to take more than learned judgements from the German judiciary to rescue the euro.
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Financial Market Comments from Chris Beauchamp, Market Analyst, IG Index.
The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.
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