By Francisco Miñana
Date: Thursday 31 May 2012
Spain remained in the eye of the storm as the European session got under way on Thursday with leading equities clawing back a fraction of the previous day's losses.
The main equity benchmark indices opened with an average gain of 0.3%. The Ibex35 is on the recovery trail as Spain’s risk premium eases off the record high of 541 basis points since the creation of the Eurozone.
The markets are awaiting action from the European Central Bank (ECB) and other European policy makers. The deterioration of Spain’s economic and financial situation lead many to believe that it will soon need to be rescued. The problem is that there may not be enough funds available.
In the foreign exchange market, the euro has rebounded versus the majors after the euro/dollar hit a low of $1.2370. There may be a pull-back to $1.25 before the continuation of the underlying bearish trend. The euro/yen rebounds from a two-month low of 97.364 and draws up a hammer formation with bullish implications for the short-term. The euro/sterling pound trades at £0.8010 and the euro/Swiss franc hovers around 1.2010.
On the macroeconomic front, there are many indicators being released throughout the day, including upcoming unemployment data in Germany and the United States.
In the political arena, the people of the Republic of Ireland will vote on Thursday on a set of measures designed to alleviate the Eurozone's debt crisis. Opinion polls suggest that the Irish will toe the European Union line and vote in favour.
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