The equity markets in the US where under pressure for a solid 2 minutes this morning, and then responded with upward momentum in the form of short covering. Coming into the weekend, many market participants were convinced that passage of a health care bill in the US, would lead to profit taking and pressure on riskier assets. This situation did not come to fruition. The S&P 500 Index rallied to a new 52 week high closing up 6 points to 1166. The dollar index sold off, and crude and gasoline edged higher.
Prospects of Greece getting a European aid package grew more distant Monday after Germany made the strongest suggestion yet that the International Monetary Fund should handle a bailout if Greece is threatened with insolvency. The Euro initially sold off on the news, but was able to rebound later in the day. On an hourly chart, the Euro tested the 1.3460 level which stopped a lot of longs out of the market before rebounding back to the current range near 1.3550.
In Equity news, Google Inc. stopped censoring its search and news results in China and began redirecting visitors to Google’s Chinese-language service hosted in Hong Kong, making good on a threat in its high-profile standoff over censorship with Chinese officials. Google was very volatile today and probably will continue to gyrate as investors get a better handle on the search giant’s prospects in China.
Tomorrow, The UK reports February inflation numbers. After the February release of January figures, BOE’s King had to write a letter to Chancellor Darling to explain the overshoot. King explained that the inflation was due to temporary factors and that over time it will ebb due to the abundant slack in the economy. If the number again shows an increase in price pressures, the BOE will have to fight an economy that is feeling stagflation.