Stocks rose yesterday after Greece’s parliament passed sweeping austerity measures, but questions about whether the plan will be enough to convince European leaders to support Athens with a new rescue package curbed an initial euro rally.
Key Wall Street indexes were modestly higher and US crude oil prices topped $100 (€76) a barrel after Greek lawmakers backed drastic budget cuts in exchange for a €130bn bailout from the European Union and the International Monetary Fund.
"There was some apprehension about it, but the fact of the matter is it was done, and it’s given some very real clarity to the markets in terms of what kind of risk Greece represents to the market," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
The Dow Jones industrial average gained 46.36, or 0.36%, to 12,847.59, while the Standard & Poor’s 500 Index rose 6.25 points, or 0.47%, at 1,348.89. The Nasdaq Composite Index was up 18.11 points, or 0.62%, at 2,921.99.
World stocks climbed 0.77%, according to the MSCI All-Country World Index, while Europe’s FTS Eurofirst 300 index of top shares was up 0.7%.
US crude oil rose 1.3% to $99.93 a barrel, after topping $100 a barrel.
However, concerns about whether Greece will be able to fulfil its tough austerity promises left some investors cautious, keeping demand steady for safe-haven US Treasuries and putting a lid on euro gains.
The euro was practically flat against the dollar at $1.321. It was 0.1% lower against the yen at 102.32.
Before Greece can secure a second rescue and get the €14.5bn it needs to meet debt repayments due on Mar 20, the Greek government must convince a sceptical eurozone that it would stick to the terms of the deal.
The focus is now on tomorrow’s meeting of eurozone finance ministers.
They may agree in principle on the aid package but are likely to withhold final approval until it is clear what proportion of Greece’s private creditors will agree to take losses.
The benchmark 10-year US Treasury note was up 6/32 in price, with the yield at 1.9637%.
German Bund futures also erased losses and turned higher as optimism with the Greek vote faded.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Tuesday, February 14, 2012
