Market rockets ahead after EU announcement

A rare glimmer of hope from the EU leaders summit

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published June 29, 2012 2:39 pm AEST

The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has jumped 1.4% this afternoon, after the EU announced a plan to recapitalise struggling banks, from the European bailout fund. EU president Herman Van Rompuy called it a "breakthrough that banks can be recapitalised directly". The EU also announced that it would create a single supervisory body for its banking sector, and leaders agreed on a tighter long-term union.

The S&P / ASX All Ordinaries (Index: ^AORD) (ASX: XAO) Accumulation index was up 1.3% at 2pm, after trading lower for most of the morning. Shares started to rocket at around 12.50pm (AEST), as news from the EU Summit filtered through to our markets.

The EU announcement was excellent news for almost the entire market, with resources stocks seeming to respond most significantly. Of the majors, BHP Billiton Limited (ASX: BHP) was trading 1.8% higher and Woodside Petroleum Limited (ASX: WPL) was up more than 2% at 2pm.

Most sectors were trading significantly higher after the announcement, with Energy, Materials and Industrials leading the gains.

The Australian dollar also reacted positively, rising by more than 1 cent on the news, to be trading at $1.0141 in afternoon trading.

Whether the latest news from Europe is a real turning point, or yet another false dawn remains to be seen, but investors were enjoying a little good news on the last trading day of the 2012 financial year.

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Motley Fool writer/analyst Mike King doesn't own shares in any company mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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