Optimists had their way on global markets overnight so far as Greece is concerned. Yes Greece presented new proposals to the EU and other creditors, but they came late, and the wrong documents were at first sent.
Wall Street and Europe finished higher and the overnight share futures market for Australia has the ASX starting with a 20 point gain this morning.
That was after the ASX 200 index finished the day’s trade up 13 points, or 0.2%, to 5610.2, while the All Ords added 11.6 points, or 0.2%, to 5603.1.
But watch the Chinese markets where trading resumes from last week’s massive trillion dollar fall. It was a holiday in China yesterday.
And watch the 2.2% fall in global iron ore prices overnight to $US60.02 a tonne – that will weigh on the big miners like BHP Billiton and Rio Tinto.
But Greece is the big story.
Markets rose in early trading overnight on hopes of a Greek compromise, then eased around the middle of trading, but then finished solidly on hopes that Greece’s latest proposals will be enough to get a deal done and allow the country to access 7.2 billion euros of remaining aid from previous bailouts.
The Greek stock market jumped 9% while the bond yields for debt from Italy, Spain and Portugal – the countries most likely to be hit if Greece headed for the eurozone exit – fell sharply.
German’s DAX index jumped 3.9% and France’s CAC 40 stock index was up 4.1% by the close.
In the US the Dow rose 104.53 points, or 0.58%, to 18,120.48, the S&P 500 added 13 points, or 0.6%, to close on 2,122.99 and the Nasdaq Composite added 36.97 points, or 0.7% to end at a record 5,153.97.
Leaders of the 19 nations in the eurozone held an emergency evening summit in Brussels overnight, but broke up with no agreement because the Greek proposals arrived late.
Discussions will continue between officials for the next few days in an attempt to reach an agreement. The leaders of the EU and the European Commission said the Greek offer was ‘positive’.
Greece must repay the International Monetary Fund 1.6 billion euros by June 30 or be declared in default.
Greek banks were given more money from the European Central Bank at the start of Monday to handle more withdrawals as the ’silent run’ continues.
The relatively good news from the Brussels meeting and a lessening in the sense of crisis should ease tensions inside Greece and slow bank withdrawals.
But the ECB will re-examine the situation later today, our time to make sure Greek banks remain solvent.
Reuters reported that in its proposal, "Greece offered to raise the retirement age gradually to 67 and curb early retirement. It also offered to reform the value-added-tax system to set the main rate at 23 percent. And it promised additional taxes on business and the wealthy.
Economics Minister George Stathakis told the BBC that Athens had avoided crossing “red lines” set by Syriza, since it would "not cut pensions or wages or raise the VAT rate on electricity.” That doesn’t sound like the basis for anything but a temporary agreement to stop the rot and protect the banks.
