The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has jumped 1.4% this afternoon, after the EU announced a plan to recapitalise struggling banks, from the European bailout fund. EU president Herman Van Rompuy called it a “breakthrough that banks can be recapitalised directly”. The EU also announced that it would create a single supervisory body for its banking sector, and leaders agreed on a tighter long-term union.
The S&P / ASX All Ordinaries (Index: ^AORD) (ASX: XAO) Accumulation index was up 1.3% at 2pm, after trading lower for most of the morning. Shares started to rocket at around 12.50pm (AEST), as news from the EU Summit filtered through to our markets.
The EU announcement was excellent news for almost the entire market, with resources stocks seeming to respond most significantly. Of the majors, BHP Billiton Limited (ASX: BHP) was trading 1.8% higher and Woodside Petroleum Limited (ASX: WPL) was up more than 2% at 2pm.
Most sectors were trading significantly higher after the announcement, with Energy, Materials and Industrials leading the gains.
The Australian dollar also reacted positively, rising by more than 1 cent on the news, to be trading at $1.0141 in afternoon trading.
Whether the latest news from Europe is a real turning point, or yet another false dawn remains to be seen, but investors were enjoying a little good news on the last trading day of the 2012 financial year.
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