Wednesday, September 12, 2012
Eurozone relief rally may run its course
September 12, 2012
Relief rallies rarely last. This is a shame, as we have just seen one of the biggest relief rallies on record, at least in eurozone bank shares. After the German constitutional court waved through the eurozone’s new rescue fund on Wednesday, the boost brought the rise in the region’s banks to 50 per cent in 35 trading days.
This is the second-biggest rise over so short a period since the currency began, and brings the banks back to where they were in March, before the latest round of the crisis.
The banks led the way for Europe’s risky assets, which all soared after Mario Draghi’s late-July promise that his European Central Bank would save the euro. Italian and Spanish shares are up a third, the euro briefly passed $1.29 on Wednesday and wider equity markets are up 16 per cent.