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July 01, 2015 at 06:09 AM
(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.
