A psychiatrist would describe the mood of the markets as manic-depressive: an alternation of euphoria and discouragement. Those who thought that the agreement on the sovereign debt crisis signed last week after night-long negotiations would put an end to the upheavals had to think again. And the uncertainties will continue until more details are available on the still open part of the announced measures, both as regards the EFSF and as regards the commitments, especially Italian ones. After yesterday's bad day, Asian stock markets opened poorly, and even the Australian Reserve Bank's key rate cut did not lift the mood of the Sydney stock market. The reduction was interpreted more as an acknowledgment of weakness than as a stimulus to the economy.
Even the relief, for the Japanese market, linked to the intervention on the yen did not last long. The Japanese currency has retraced part of the losses, and still remains at an uncomfortably high level for the producers of the Rising Sun, who also have to deal, in important sectors such as the auto and electronics, with the serious repercussions of the floods in Thailand on their supply chains.
