While you were sleeping: Optimism on Greek deal

Wall Street moved higher amid optimism Greece will reach a deal with international creditors soon.

The latest US economic data also kept alive expectations the Federal Reserve won’t raise interest rates until September, at the earliest.

In late trading in New York, the Dow Jones Industrial Average rose 0.53% the Standard & Poor’s 500 Index added 0.36%, while the Nasdaq Composite Index climbed 0.54%.

Recent gains in the shares of JPMorgan Chase and Goldman Sachs, at 1.5% and 1.49% respectively, led the Dow higher. 

"As the risk around Greece is starting to significantly reduce, investors are putting money back into US equities," Geneva Fund Partners chief executive Marshall Gause, told Reuters. "To be sure, risk remains and investors are wary." 

Europe’s Stoxx 600 Index ended the session with a 0.1% decline from the previous close. The UK’s FTSE 100 Index rose 0.3%, France’s CAC 40 Index increased 0.6% and Germany’s DAX gained 0.8%. In contrast, Greece's ASE Index jumped 4.1%.

“Whilst the balance of probability suggests that some sort of solution will be reached - which is why markets aren’t really selling off - the cost of being wrong here is potentially quite high,”  London's EFG Asset Management head of research Daniel Murray, told Bloomberg. “That’s why there’s this underlying tone of nervousness.”

Meanwhile, President Mario Draghi reaffirmed plans for the European Central Bank's monthly €60 billion bond-buying programme to continue through to September 2016.

"The latest survey data to May remains consistent with a continuation of the modest growth trend in the second quarter. Looking ahead, we expect the economic recovery to broaden," Draghi said, after the ECB's latest policy meeting at which it kept rates steady.

“However, economic growth in the euro area is likely to continue to be dampened by the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms,” Draghi noted.

In the US the latest economic reports offer cautious optimism about the pace of growth.

“Reports from the 12 Federal Reserve districts suggest overall economic activity expanded during the reporting period from early April to late May,” according to the Fed’s Beige Book. 

“Outlooks among respondents were generally optimistic, with growth expected to continue at a modest to moderate pace in several districts,” the Beige Book noted. “Manufacturing activity generally held steady or increased over the reporting period.”

Separately, ADP Research Institute says US companies added 201,000 jobs in May, after a revised 165,000 increase in April. And other reports show the US trade deficit shrank to $US40.9 billion in April, after it ballooned to a revised $US50.6 billion in March, while the Institute for Supply Management’s non-manufacturing index slid more than expected to 55.7 in May, from 57.8 in April.

"This is consistent with modest growth," New York's FTN Financial economist Christopher Low, told Reuters. “ It's enough for the Fed to consider tightening. September is very much on the table.”

(BusinessDesk)