By Greg Peel

The Dow closed up 53 points or 0.4% while the S&P gained 0.1% to 1258 and the Nasdaq lost 0.2%.

Aside from generating a lot of anger in Europe, Monday night's news that Standard & Poor's was putting all of the eurozone that isn't already on negative watch on negative watch has had little ongoing impact. A few months ago when markets were at the peak of nervousness such news might have caused a violently weak reaction, as was the case when the US was downgraded, but the US downgrade was quickly forgotten and last night's market activity suggests talk of downgrading Europe has been met with a shrug.

Let's face it ? if every major economy in the world loses its AAA rating, what is an AAA rating? If AA+ is the new AAA, why not just rebase and call it AAA again. Credit is only relative after all, and there seems little point in suggesting the state of New South Wales, still trying to unravel years of endemic government corruption, could save the world because it happens to still have an AAA rating by virtue of not spending any money for the benefit of its citizens. Except on Tiffany of course (allegedly).

German and French stock markets were around a percent weaker last night having closed before the Financial Times bombshell hit in the New York session on Monday night. The Dow lost around 100 points on that news, and while last night's 50 point rally in the Dow didn't quite make up for it, there certainly is no panic about. Overriding any irrelevance emanating from now derided credit agencies is a growing hope Europe can and will sort itself out. No one expects the latest concepts being touted to be a quick fix, but sentiment will turn long before reality if markets believe reality will eventually catch up.

Most importantly, the yield on the Italian ten-year bond last night fell below 6%. A week ago the Italian government had to pay 7.5% to borrow from the market. Aside from bond markets liking what they hear about fiscal union in the eurozone and an ECB ready to embrace such a plan, the transition to Super Mario (Monti) as technocrat prime minister is also very much a part of apparent renewed faith.