Action in Asia portends a strong open in Europe and North America

Looking at the action in overnight trading, I see a very strong move to the upside in the offing in equity markets worldwide. All of the data is looking bullish. In Australia, the All Ordinaries is up five percent led by banking shares. In Singapore, the Straits Times is up 1.5% as well. Dow Futures are up over 200 points.

In currency markets, the Euro is up the most in three months as currency traders seem heartened by the EU moves at the weekend.

The real question is how credit markets react to the EU crisis response and whether we see risk spreads come down to more reasonable levels. The overhang due to the renegotiation of Morgan Stanley’s equity deal with MUFJ is also another potential worry yet to be put aside.

But, all in all, we should see a very good rally on Monday.

Sources
Australian stocks rebound, led by banks – SMH
Euro Rises Most in 3 Weeks as European Leaders Guarantee Banks – Bloomberg
Straits Times Index quote – Yahoo! Finance
Morgan Stanley Talks Lead Weekend of Emergency Discussions – Deal Book
Pre-Market Trading – CNN Money