Global equity markets received a much-needed bump on Tuesday, as rumors of a backstop to Greece’s financial mess calmed fears and sent stocks sharply higher. Elsewhere, Iran announced that it had begun enriching low-grade uranium for use in a medical research reactor, setting the stage for another round of warnings from the international community.
The ETFdb 60 Index climbed 11 points on Tuesday to close at 997.34. It was the best performance of the month for the index, which had declined in three of its previous four sessions. The ETFdb 60 is down about 3.5% on the year. Winners outnumbered losers by nearly three-to-one on Tuesday.
The Market Vectors Gold Miners ETF (GDX) continued its volatile ways, climbing 4.4% on the day as investors sought out bargains in sectors that had been hit particularly hard in recent weeks. GDX also benefited from a rise in gold prices as the dollar declined against its major rivals.
Also heading higher on Tuesday was the Vanguard European ETF (VGK), which reacted favorably to news that Germany is considering a plan to offer Greece loan guarantees in order to calm worries about a debt crisis in the region. The plan would reportedly be structured within EU framework, but lead by Germany. The cost of insuring Greek debt plunged by as much as 20% on the news, as it appeared increasingly likely that euro zone members would act to avoid a default.
European markets have plunged in recent weeks as attention has focused on the rapidly-deteriorating public finances of Greece. The country’s deficit as a percentage of GDP has climbed above 10%, far exceeding euro zone requirements. Despite the fact that Greece accounts for only about 2% of EU GDP, the nation’s budget crisis has sparked fears of a “domino effect” in debt markets that leads to another global recession.
Disclosure: No positions at time of writing.