Global markets are ecstatic on Monday over the promise of Germany and France to announce a bailout plan to address the European debt crisis by month's end. The France-Germany plan will include recapitalizing European banks and addressing the Greek sovereign debt crisis.
The S&P 500 Index jumped 31.82 points, or 2.75 percent, trade at 1,187.28 at 10:54 a.m. ET. The Dow Jones Industrial Average surged 264.18 points, or 2.38 percent, to trade at 11,367.30. The Nasdaq Composite rose 2.97 percent.
Equities markets in Europe and Asia are up as well and the euro rallied against the safe-haven U.S. dollar.
“We're determined to do everything necessary to ensure the recapitalization of our banks,” said German Chancellor Angela Merkel in a press conference.
“We need to deliver a response that is sustainable and comprehensive,” said French President Nicholas Sarkozy at the same event.
Merkel and Sarkozy, however, did not reveal any details and concrete figures about their plan, which fueled doubts among skeptics.
Merkel and Sarkozy “delivered little in substance apart from a promise … markets may give Eurozone officials the benefit of the doubt but patience will run thin if no progress is made on these fronts,” stated Credit Agricole.
“The key here is that they’re still discussing how to go about it and have no concrete plan yet,” FOREX.com currency strategists said. They were also uncomfortable with Merkel’s apparent stance that the Eurozone bailout fund ESFS “should only be used as a last resort.”
“We continue to look for opportunities to sell EUR on strength as well as risk assets in general,” the FOREX.com currency strategists added.
For now though, investors seem quite happy with the “Merkozy” promise.
“The positive tone in risk sentiment can persist for a while longer,” stated Stephen Gallo, head of market analysis at Schneider Foreign Exchange.