PROTESTS MAY RAGE and buildings may burn in Athens but markets have reacted positively to the news that Greece’s parliament voted through an austerity deal last night to theoretically ensure a second bailout.
As the majority of Greek MPs voted through a deal – including a cut of 20 per cent to the minimum wage, public sector job losses and other austerity measures – protesters clashed with riot police as the violence escalated last night.
But this morning markets reacted positively to news of a deal that in theory provides for a second Greek bailout of €130 billion and brings stability to the eurozone.
In London, the FTSE is up by almost 1 per cent at the time of writing. In Paris, the CAC 40 is up by just over 0.5 per cent while on the German stock exchange in Frankfurt, the Dax is up by nearly 0.6 per cent.
In Greece, itself its general index, the ASE (Athens Stock Exchange), was up by nearly 4.5 per cent on news of the country’s politicians striking a deal.
“The market is relieved that things moved forward in Greece. It shows that political solutions can be found in Europe, albeit in the last minute,” Peter Braendle, from Swisscanto Asset Management AG in Zurich, told Bloomberg.
Overnight in Asia Hong Kong’s Hang Seng gained0.5 per cent and South Korea’s Kospi added 0.6 per cent.
Over the Atlantic, Wall Street also appears headed for a higher opening later today with Dow Jones industrial futures up 0.5 per cent and S&P 500 futures gaining 0.7 per cent.
Eurozone finance ministers will now meet on Wednesday to decide whether to rubber stamp the €130 billion bailout package.
Before then, they will want a written commitment from the Greek party leaders that they will adhere to the austerity reforms even after an April general election where it appears likely that many MPs in the current government will be voted out.
- additional reporting from AP
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