Concerns about the European debt crisis have instigated contagion fears in the minds of investors worldwide, but recent market movements have shown that investors are now hopeful that the tides are changing and that the European Central Bank may soon take action to contain the debt crisis. Asian markets rallied for the third consecutive day on Tuesday, allowing for the S&P to break through the 1.400 level, a benchmark it’s been trying to reach for several days. Nevertheless, skeptics question whether the rallying market is a true sign of optimism or whether it’s simply a result of the summer’s traditionally light trading volume.
The S&P 500 Index rose 7.12 points on Wednesday, hitting 1,401.35, while the Dow Jones industrial average hit 13,168.60, up 0.39 percent as compared with the S&P 500 Index’s 0.51 percent. Asian indices saw even stronger gains, with the MSCI Asia Pacific Index gaining 0.6 percent to 120.27 and Jappan’s Nikkei 225 Stock Average rising 1.4 percent.
Early in today’s Asian session the euro was trading at 1.2382 against the US dollar, up from a low of 1.2377. The common currency was also trading down against the yen, at 97.30. Later today Germany will hold an auction on 10 year government bonds, which will cause further volatility in both the European and US trading sessions.