Industry NewsThe energy and equity markets have reacted bullishly to the eurozone debt deal secured this week at an emergency EU summit. Speculation had been mixed over if any announcement would be made and if it would be sufficient. While there is still uncertainty over the effectiveness of the plans, the nature of the deal has met market expectations at this time, providing the support currently being felt by commodities.
At the end of last week, EU ministers met to discuss the details of a previously announced accord between France and Germany. Going into the summit, it had already been highlighted that additional talks would be needed this week, specifically on Wednesday. However, even then there were concerns that this meeting would pass with no firm answer on the issue. These fears were ultimately unfounded.
After overnight talks, the EU minister unveiled a "three-pronged" deal. First, those banks holding any Greek debt have agreed to a 50 per cent loss on their value. Meanwhile, the eurozone bail-out fund will be enhanced to around €1 trillion. Finally, European banks will be required to raise more capital to offset further financial problems.
French President Nicolas Sarkozy told press, "The eurozone has adopted a credible and ambitious response to the debt crisis." Jose Manuel Barroso, President of the European Commission added, "Europe is closer to resolving its financial and economic crisis."