The regional index is little changed and Asian equity markets remain cheaper than the Western ones. L'The MSCI Asia Pacific index is trading at 1,2x book value, versus 2,1x for the S&P500 and 1,3x for the battered Stoxx600. As in other episodes of good news or first aid, the relief lasted for the space of a morning, and the European crisis continues to fester despite the formation of a Greek government in favor of maintaining the agreements with the EU.
What worries are not the requests of the new government in Athens about some easing of commitments and Germany's refusal: between reasonable people there is an agreement. What is worrying is that, as in those video games in which, when one monster is killed, another appears, the attention of the markets has turned to Madrid, where 10-year rates have well exceeded 7%.
The mistake made in granting Spain the credit facility of €100 billion is palpable insisting that these go through a loan to the Spanish government and not directly to the banks (as was also possible according to the statute of the EFSF). So the Spanish public debt widens and the markets get scared.
The euro, however, recovered slightly to 1,26 while oil fell back to 83 dollars a barrel.
