Greek settlement sparks shares surge
Stocks on Wall Street rebounded from a drop at the end of last week, sparked by agreement on Greece’s austerity package.
Earlier, other world sharemarkets also advanced, while US oil rose above $US100 a barrel for the first time in two weeks.
The measures were required for Greece to receive the international bailout funds needed to keep the country afloat.
Some uncertainty remains, however, given the violent protests and as a debt-restructuring deal with private creditors still hasn't been completed.
In other overnight developments, Apple shares broke above $US500 for the first time as technology stocks surged. On the day, Apple rose 1.6% and is up 23% for the year.
At the close (10am NZ time), the Dow Jones Industrial Average was up 72.81 points, or 0.6%, to 12,874.04. The S&P 500 index was up 0.7% to 1351.77 and the Nasdaq Composite gained 1.0%, to 2931.39.
Nineof the S&P's 10 sectors were higher, led by financials and telecommunications. Bank of America led blue chips higher, rising 2.4%. United Technologies rose 1.7%..
Other markets: Europe, Asia up
European markets surged, with the Stoxx Europe 600 up 0.7% to 263.09 after the Greek parliament passed the austerity
London's FTSE 100 was up 1% at 5910.22, Frankfurt's DAX was up 0.8% to 6747.34 and Paris' CAC-40 added 0.5% at 3390.50.
Most Asian markets gained. Japan's Nikkei Stock Average closed 0.6% higher at 8999.18, and Australia's S&P/ASX 200 index advanced 0.9% to 4285.10, both notching their first gains in three sessions.
Korea's Kospi added 0.6% to 2005.74, its fifth gain in six sessions. Hong Kong's Hang Seng Index rose 0.5% to 20,887.40, while China's Shanghai Composite Index slipped fractionally to 2351.85, snapping a three-session winning streak.
In India, the Bombay Stock Exchange's Sensitive Index added 0.1% to 17,772.84.
Commodities: Oil rises above $US100
Crude-oil futures rose to their highest level in two weeks. Light, sweet crude for March delivery rose $US1.63, or 1.6%, to $US100.30 a barrel in New York. Earlier, the contract rose to as high as $US100.62, its highest level since January 31.
Brent crude on ICE Futures Europe rose $US1.02, or 0.9%, to $US118.33 a barrel.
Gold futures eased slightly. Gold for April delivery declined 40 USc to settle at $US1724.90 an ounce in New York. It was gold’s second straight session in the red.
Currencies: Euro rises against US dollar
The euro advanced but pared early gains against the US dollar. The euro recently traded at $US1.3205, off its highs of the day but up from $US1.3199 late Friday.
The dollar was at ¥77.55 from ¥77.61, while the euro was at ¥102.40 compared with ¥102.48.
The UK pound traded at $US1.5775 compared with $US1.5755, while the dollar bought 0.9157 Swiss franc from 0.9166 franc.
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Comments and questions6
Can someone please explain to me how this rescue package will fix the problems of Greece? I have been looking for an explanation but I can’t seem to find the answer. I realise they are trying to cut expenditure/costs, but I haven’t read anything about creating growth to pay for the interest on this huge loan, let alone pay it, and the other earlier debts, back one day. I would have thought you would need a strategy to bring the country’s GDP up, rather than just throwing more money at it again and again. Won’t it all just get written off again in 2 years time?
And how is this different from Iceland, they responded differently in similar circumstances didn’t they? Seems to have worked for them...
Anyone with more knowledge, please help, I’m not finding newpaper commentary very informative on this issue.
Good questions Anonymous. I read a long article recently about how Iceland dealt with their GFC. Basically, they let all the banks go to the wall and then started to pick up the pieces after meltdown. Hard on everyone but they are now on the way back. I've long thought our finance company and bank government guarantee was wrong and everyone should have been allowed to take the consequences of their action. Hard I know but what a good lesson.
Thanks for your comment Traveller
The loan is for Greece to pay upcoming interest on German bank loans. If Greece fails, so do a number of German banks. The money go-round continues.
It is prolonging the inevitable. They all need to take a haircut.
You are right. This is not the solution, rather just prolonging the inevitable.
The only solution for Greece is to leave the Euro. Course the Germans wont like it, but there is no other options available. It like pass the parcel, and now the music stopped for everyone.
Mark my words. The germans will make off with whats left of Greeces infrastructural state assets, followed by their removal from the Euro.
Thanks Briklayer and Richard S for your comments, that all makes sense when you think about it.
It is sad though, when you see the country continuing to crumble. I was reading overnight that some people are now working for 900 euro a month, it is basically a third world country now with an exchange rate that is completed out of whack with their realities. I feel most for the people, some people say they caused it themselves, all I know is I wouldn’t want to be Greek right now.
I wonder if we will see a wave of Greek immigrants...not to stereotype, but New Zealand really could do with some decent Greek food, but the immigrants always seem to move to Australia...shame...
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