European Stock Market, 16 January: Despite S&P Grade, Stocks Rally, Euro Bond Yields Fall

American stock markets were closed on Monday in observance of Martin Luther King, Jr. Day, but European markets were open and they staged rallies.

European stocks closed the day at a five-month high despite the recent S&P downgrade, and keeping in mind Moody’s decision to maintain France’s AAA status.  The Stoxx Europe 600 index increased by 0.8%, the FTSE 100 gained 0.67%, CAC 40 saw a bigger gain of 1.03%, the DAX did an even better 1.399%, and the IBEX 35 picked up a modest 0.226%. 

Also helping to rally the European markets were the results of the latest French bond auction.  The one-year bond auction held on Monday showed that funds have not frozen for Europe’s second-largest economy.  The French government auctioned off almost €2 billion worth of one-year treasury notes at an average yield of 0.406%, which is less than the January 9th yield of 0.454%.

Greece remains in a struggle to negotiate with bond holders on its debt, as well as delivery on its new fiscal rules.  Talks were halted on Friday; however, they have agreed to reignite discussions again on the 18th of January.  It is believed around the continent that unless Greece can bring a quick resolution, they will default on their debt.  Even if they do, the fiscal outlook for the Eastern Mediterranean nation is still bleak at the moment.

In the energy commodities market, Brent crude rose 0.87% to trade around 111.31, on continued fear over Iran.  On Monday, the Iranian government advised other oil-producing nations, as a means of spiting European and American interests, not to increase production.  Gas oil rose as well, climbing 0.63% to trade around 957.25.  Light sweet crude oil gained about 1% to just under 100.00 per barrel.

Gold has gained approximately eight-tenths of a percent to trade around $1,643.50 per ounce. 

In currency markets, the Euro continued its decline versus the US Dollar to trade around 1.2643 USD.  The British Pound Sterling rose only slightly against the greenback to approximately 1.5298 USD.  Finally, the Swiss Franc has moved to 1.0473 USD, following a few weeks of mild volatility.