Greece Austerity Ignored
This past weekend’s deal by the Greek government to sign on to enhanced austerity measures to combat the country’s rising debt problems lead to two outcomes: a bailout package fashioned by the International Monetary Fund to the tune of 130 billion euros and riots in the streets among public outcry at deep job and pensions cuts.
Despite the austerity vote, Greece will still need to demonstrate to the rest of the European Union that it can stick to its austerity plan and implement it in a timely fashion that will not lead to a default down the road. More austerity votes are planned and some EU member nations believe that the country will not be able to follow through on its promises.
U.S. equity traders, however, shrugged off the riots and looked at the bailout in a positive light. Equities continued to climb higher despite the crisis with the S&P 500 gaining 9 points to close at 1351, unable to break the 1346 technical level. The Dow Jones Industrial Average soared 72 points to close at 12,874 while the tech-heavy Nasdaq Composite jumped 27 points to 2931 thanks to Apple, which closed over $500 a share for the first time.
Despite the continuing rise in equity indices, volumes and volatility remain dull. One NYSE floor broker called Monday’s trading session “boring” and said he expects more of the same for the weeks to come: a drop in the morning followed by a rise into positive territory into the afternoon.
Bond markets also indicated relief of a bailout as Treasury prices fell with yields rising in tandem in Monday morning trading, eventually settling flat by late afternoon.
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