U.S. stocks rebound, euro falls as Greek deadline looms

Stock brokers

Stock brokers

Stocks on Wall Street rose in choppy trade on Tuesday and a global equities gauge ticked up, while the euro remained under pressure as Greece grappled with a looming deadline on a debt payment to the IMF.

Greece submitted a new two-year aid proposal to its creditors, calling for debt restructuring in what seemed like a last-ditch effort by Athens to resolve its impasse with lenders. Talks between Greece and its creditors broke down over the weekend, causing Greece to close its banks and impose capital controls.

Greeks are due to vote in a referendum on Sunday that EU partners say will amount to a choice between staying in the euro or leaving.
German Chancellor Angela Merkel played down any hopes of a last-minute deal with Greece on Tuesday and said there will be no new negotiations before the planned referendum.

“Probably the market still has in the back of its mind the idea this is all a bit of a game and eventually they’ll come with some sort of accommodation to avoid a worst-case scenario,” said Darren Williams, AllianceBernstein’s London-based senior economist for Western Europe.

“There is a certain complacency,” he said, adding that he expects opinion polls on the Greek referendum vote to keep markets volatile.

The CBOE Volatility Index .VIX rose for a fifth straight session, its longest streak since mid January.

The Dow Jones industrial average .DJI rose 74.27 points, or 0.42 per cent, at 17,670.62. The Standard & Poor’s 500 Index .SPX was up 10.79 points, or 0.52 per cent, at 2,068.43. The Nasdaq Composite Index .IXIC was up 38.28 points, or 0.77 per cent, at 4,996.75.
The S&P earlier rose as much as 0.8 per cent.

The MSCI All-Country World equity index .MIWD00000PUS was flat. The pan-European FTSEurofirst 300 .FTEU3 index and the euro zone’s blue-chip Euro STOXX 50 index .STOXX50E were down 1.3 percent each.

The borrowing cost on a key source of overnight loans for Wall Street jumped as traders competed for a shrinking pool of cash before quarter end. The interest rate on overnight loans in the repurchase agreement market was last quoted as high as 0.65 per cent, which would be the highest closing level since November 2008.

In commodities, oil futures bounced back from three-week lows but Brent was set to close its second consecutive month of losses.

“Markets are worried that a Greek debt default could hit European economic growth and thus fuel demand,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Brent LCOc1 was up 2.2 per cent at $63.40 a barrel after falling to $61.35 on Monday, its weakest since June 5. It was down 3.7 per cent for June. U.S. crude CLc1 gained 1.4 percent at $59.15. It was set for its first monthly decline in three, down 2.2 percent.

The euro EUR= was last down 0.8 per cent against the U.S. dollar at $1.1149. The euro’s weakness is “partially the reality that there is not going to be a (Greek) payment to the IMF,” said Jason Leinwand, managing director at rates, currencies and commodities derivatives hedge advisory firm Riverside Risk Advisors in New York.

He said, however, that optimism for a Greek resolution lingered, given the upcoming referendum.

Receive News Alerts on Whatsapp: +2348136370421

No comments yet