The wealth of Italian and Spanish markets increased by more than 2% in early trading, while other major European indexes also improved, such as the yields on Madrid and Rome bonds.
Asian shares fell during the night and there were worries that European markets would follow, but London and Paris’ FTSE and Cac indexes had risen by 1%.
The yield on Spain’s 10 year bond fell to 5.2% from more than 6%, with Italy’s bond falling by a similar amount. Global markets were stripped of trillions of dollars’ worth of value last week, with Dax dropping 13%, the FTSE 100 losing 10% and the Dow ending the financial week 5.8% lower than at the beginning.
It all came to a head when Standard & Poor cut the USA’s triple A rating to a double A+, blaming concerns over the country’s budget deficit and the fact that Congress agreed to raise the country’s debt at the last minute.
The USA is still not safe though, with many investors fearing that its economy will continue to suffer, with a double-dip recession being a possibility.
This would spell bad news for Asia, as it relies on America buying billions of dollars’ worth of exports every month.
The price of gold and oil has started to reflect the global economic slowdown, with gold reaching a record high of $1,704 an ounce, and oil slipping around 3% in all major suppliers. US light crude, for example, fell 2.8% to $84.44 a barrel.