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(CEP News) - A series of plans to improve liquidity and interbank lending in Europe and the United States have turned around equity sentiment. Canadian and Japanese markets are closed for holidays, along with U.S. fixed income.
The Eurostoxx is up 6.6% after the euro zone governments announced on Sunday they will take all actions necessary to help stabilize the financial systems in their respective countries and encourage bank-to-bank lending, with specific details of each government's plan expected later on Monday. The U.S. Treasury announced a "strong, decisive and effective program" including seven policy teams committed to battle the unpredictable credit crisis, said Neel Kashkari, interim head of the new Office of Financial Stability. The European and U.S. programs are expected to be modelled after the UK government's plan to stabilize the banking system through the purchase of bank preference shares in order to recapitalize the sector and boost confidence. U.S. equity market futures are higher with contracts on the Dow Jones Industrial Average up 346 points to 8716, the S&P 500 up 46 points to 937 and the Nasdaq up 56 points to 1338. European stock markets are also higher, with the Eurostoxx up 133 points to 2227, the UK FTSE 100 up 175 points to 4107 and the German DAX up 331 points to 4876. In Asia, the Hang Seng Index was up 1515 points to 16312, while the Nikkei was closed for a holiday. In Germany, returns on two-year German bonds are up 6.3 bps to 3.10%, with five-year yields up 10.1 bps to 3.66%, 10-year yields up 4.8 bps to 4.04% and 30-year yields up 5.3 bps to 4.51%. Yields on UK two-year bonds are up 14.3 bps to 3.67%, with five-year yields up 16.5 bps to 4.31%, 10-year yields up 15.5 bps to 4.62% and 30-year yields up 15.4 bps to 4.65%. The Canadian dollar is up 0.0134 to 0.8621 against the U.S. dollar (1.1599 USD/CAD) and up 0.73 to 86.54 against the yen. The U.S. dollar is down 0.27 to 100.41 against the yen and the Dollar Index is down 1.808 to 81.189. The euro is up 0.0259 to 1.3667 against the U.S. dollar, up 0.0121 to 1.5855 against the Canadian dollar, unchanged at 0.7864 against the pound sterling and is higher by 2.23 to 137.22 against the yen. The pound sterling is up 0.0336 to 1.7378 against the U.S. dollar and up 0.0159 to 2.0162 against the Canadian dollar. WTI crude oil is up $4.28 to $81.98. The front month gold contract at the Chicago Board of Trade is down $1.80 to $854.80 per ounce. All data taken at 9:05 a.m. EDT. By Adam Button,
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