After the G20 and IMF meetings held over the weekend, European shares have risen steadily. Although European Union officials have insisted that no definitive plan to boost the economy was agreed upon during the meetings, it seems that the talks have inspired confidence back in investors.
The UK’s FTSE 100 saw a rise of 2%, Germany’s Dax index increased 3% and France’s Cac went up 1.8%.
Over the course of the discussions, a number of topics were visited including the Greek debt problem and how best to deal with it. In addition, it was proposed that the big European banks, that are potentially vulnerable to debt defaults by large economies, should be in some way reinforced against this. The notion that the eurozone bailout fund, the European Financial Stability Facility, should be increased was also discussed. This would mean that the EFSF could buy bonds from struggling European countries with high debt levels, and have the funds to give loans to banks and governments.
The fact that these suggestions were discussed appears to have eased investors’ anxiety as it implies that some serious action is intended to be taken.
Some of the biggest stocks to rise were European banks. Germany’s Commerzbank rose 5.7%, the Royal Bank of Scotland gained 5.2% and BNP Paribas in France went up 7.7%.
Although the markets appear much more optimistic than last week so far, it has been warned by a markets analyst at Hargreaves Lansdown, Keith Bowman, that it may only be temporary. He claimed that the sudden boost in the market was the result of fresh hopes that European governments are going to start making bold movements in helping the eurozone situation in the near future, however there are still doubts about how effective the measures that were discussed would be, and concerns over the condition of the eurozone are likely to set in again.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.