Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Economy & Markets

U.S. stocks rise with Europe shares, treasuries fall on Greece

Your article was successfully shared with the contacts you provided.

(Bloomberg) — U.S. stocks followed European shares higher, while German bunds fell as Greece signaled it was ready to compromise to end a standoff over a bailout. The dollar extended gains after a private report showed employers added more workers than forecast.

The Standard & Poor’s 500 Index added 0.7 percent at 9:33 a.m. in New York, following its first three-month drop in 10 quarters. The Stoxx Europe 600 Index jumped 1.8 percent after two days of declines. The yield on 10-year bunds rose seven basis points to 0.83 percent and the rate on Treasuries jumped seven basis points to 2.42 percent. The Bloomberg Dollar Spot Index climbed 0.5 percent. Oil fell 2 percent.

Global equities rebounded and haven assets from bonds to the yen retreated as Greek Prime Minister Alexis Tsipras offered to accept proposals from the nation’s creditors, while sticking points remain on pensions and tax discounts to Greek islands. The country missed a deadline for repaying $1.7 billion to the International Monetary Fund June as its bailout expired after five months of brinkmanship.

“The prospect of removing some of the macroeconomic uncertainty associated with Greece is boosting stocks,” Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68 billion. “We also got an ADP report this morning that was much better than expected, which bodes well for tomorrow morning’s payroll report. The combination of the two is helping to contribute not only to the rally in equities, but symmetrically the selloff in bonds.”

ECB Lifeline

The S&P 500 lost 2.1 percent on Monday, the most in more than a year, while the Stoxx 600 sank 3.9 percent in two days after Tsipras’s surprise call for a July 5 referendum on the terms of any bailout. Euro area finance ministers will weigh the bid from Tsipras and European Central Bank policy makers are set to discuss whether to maintain their emergency lifeline.

Treasury rates have recouped most of a 15 basis-point decline on Monday, while bunds rates have retraced about half of their slide. The euro weakened as the currency continues to act like a haven asset, rising as the situation worsens and sliding as Greece seems to be edging closer to a deal.

“News flow out of Greece is dictating whether risk is off or on,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon. “It’s just time for the market to consolidate after some very heavy losses. Maybe there’s hope of a last-minute deal on Greece.”

Jobs report

Though Greece is setting the tone for global assets, investors also have an eye on the U.S. economy, with the government’s monthly payrolls report due Thursday. The American markets are closed for a holiday Friday.

A report today showed companies in the U.S. boosted employment in June by 237,000, the most in six months. The increase followed a revised 203,000 rise in May, according to ADP Research Institute in Roseland, New Jersey.

The S&P 500 halted a nine-quarter winning streak Tuesday, losing 0.2 percent in the past three months and extending its worst start to a year since 2010. Prospects for higher interest rates and Greece’s travails have frozen a market that rose 47 percent between 2011 and 2013.

The index is still up 0.2 percent in 2015, holding in a tight range close to a record even after three years of double- digit gains, on optimism the economy is strong enough to withstand higher rates this year.

Europe assets

More than 15 shares advanced for every one that declined in the Stoxx 600, with trading volumes 41 percent higher than the 30-day average, according to data compiled by Bloomberg. The gauge slumped 4 percent last quarter, the most in three years. Germany’s DAX Index climbed 2 percent today, after being the worst performer among developed markets in the past three months. Markets in Greece are closed this week.

“The risk appetite is back given that the Greece default on its IMF payment did not trigger a general panic and that a bailout agreement may well be back on the table,” Ipek Ozkardeskaya, an analyst at London Capital Group, said by e- mail.

The Global X FTSE Greece 20 ETF added 7.9 percent in early New York trading. The ETFs rebounded 6 percent on Tuesday after tumbling 19 percent at the start of the week. American depositary receipts of National Bank of Greece SA jumped 16 percent following a 7.9 percent gain.

Italy’s 10-year bond yield declined nine basis points to 2.25 percent and Spain’s dropped nine basis points to 2.21 percent. Portugal’s bonds rose, with yield falling 14 basis points to 2.86 percent. It’s still up from 2.72 percent on June 26.

Emerging markets

The MSCI Emerging Markets Index rose for a second day, adding 0.4 percent as benchmark gauges in India, Malaysia and South Korea climbed more than 0.7 percent. Hong Kong markets were closed for a holiday.

The Shanghai Composite Index fell 5.2 percent after a two factory gauges missed estimates showed the economy remained sluggish and margin debt slumped for a seventh day. In the U.S., a private report will probably show employers added more jobs in June, according to a Bloomberg survey.

Brent crude futures slid 1.3 percent in London. Production from the Organization of Petroleum Exporting Countries accelerated last month to the highest level since August 2012 as Iraq pumped at a record, a Bloomberg survey showed.

U.S. crude inventories expanded by 1.9 million barrels last week, the industry-funded American Petroleum Institute was said to have reported Tuesday.

–With assistance from Garfield Reynolds in Sydney, Ben Sharples in Melbourne, Emma O’Brien in Wellington, Anna Kitanaka in Tokyo, Roxana Zega in Zurich, Paul Dobson and Cecile Vannucci in London, Nick Gentle in Hong Kong and Joseph Ciolli in New York.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.