Hopes for Greek-debt vote propel stocks

GLOBAL equity markets surged as Greek politicians prepared to vote on crucial spending cuts aimed at diffusing their country's debt crisis and dodging another financial catastrophe.

By InvestSMART · 30 Jun 2011

By InvestSMART ·
30 Jun 2011

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GLOBAL equity markets surged as Greek politicians prepared to vote on crucial spending cuts aimed at diffusing their country's debt crisis and dodging another financial catastrophe.

Strong overseas leads helped the S&P/ASX 200 Index claw back this week's losses, rising 55.2 points, or 1.2 per cent, to 4529.

Greece's parliament was last night due to vote on a fresh austerity package that its lenders are demanding before they approve another loan.

Macquarie Private Wealth division director Martin Lakos said investors were betting that the tough cuts, endorsed by the European Union and International Monetary Fund, would win parliamentary approval.

Goldman Sachs dealer Richard Coppleson said another supportive factor was that German banks had agreed to roll over about $US10 billion ($A9.5 billion) in Greek debt, following a French plan for banks to reinvest half their Greek debt in 30-year bonds.

The Australian dollar rose above $US1.05 again, trading at its highest in a week, reflecting optimism about the Greek vote.

At 5pm yesterday it was at $US1.0585, up US1.22?.

RBS FX strategist Greg Gibbs said the Aussie was likely to return to l about $US1.10 within the next year.

He said RBS was upbeat about the economy of Australia's biggest trading partner, China, and was forecasting domestic interest-rate rises within the next year, which would make the Aussie attractive to foreign investors.

"The AUD has been much more stable during this period of Greek debt crisis," Mr Gibbs said. "[It] is still holding on to much of its sharp gains in April, and its daily volatility has been relatively muted."

The renewed optimism about Greece coupled with a weakening US dollar lifted oil prices by more than 2 per cent, a four-day high.

The global benchmark, West Texas intermediate crude, climbed $US2.28 to $US92.89 a barrel, while the Asia Pacific benchmark, Tapis, firmed $2.34 to $115.67 a barrel.

The energy sector was the ASX's top performing sector, advancing 2.6 per cent. Woodside Petroleum firmed 98?, or 2.5 per cent, to $40.62, Origin Energy rose 48?, or

3.2 per cent, to $15.38 while Santos was 28? stronger at $13.2.

Among the big miners, BHP climbed 78?, or 1.8 per cent, to $43.15, goldminer Newcrest rose 75?, or 2 per cent, to $37.10, and Rio Tinto firmed $1.18 to $81.53.

The top four banks were all stronger, with Commonwealth leading the charge, rising 57?, or 1.1 per cent, to $51.37.

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Frequently Asked Questions about this Article…

Why did global equity markets and the S&P/ASX 200 rise after the Greek debt vote news?

Markets surged because investors grew optimistic that Greece's parliament would approve a new austerity package demanded by lenders. The prospect of debt relief measures and bank support helped lift global risk appetite, sending the S&P/ASX 200 up 55.2 points (about 1.2%) to 4,529.

How did the Greek debt developments affect the Australian dollar (AUD)?

Renewed optimism about a Greek deal and a weakening US dollar pushed the AUD higher. The article reports the Aussie trading at about US$1.0585 (up roughly 1.22%), with RBS strategist Greg Gibbs forecasting the AUD could return to around US$1.10 within a year.

Which Australian sectors and stocks led the gains on the ASX after the Greek vote?

The energy sector was the top performer, advancing about 2.6%. Key energy stocks mentioned were Woodside Petroleum (up ~2.5% to $40.62), Origin Energy (up ~3.2% to $15.38) and Santos (up ~2.8% to $13.20). Major miners and banks also rose.

What happened to oil prices and why does that matter for energy stocks?

Oil prices rose more than 2%, with West Texas Intermediate climbing US$2.28 to US$92.89 a barrel and Tapis up to US$115.67 a barrel. Higher oil benchmarks can boost energy-sector revenue expectations, helping lift energy stocks on the ASX.

How did mining companies and gold producers perform after the Greek news?

Big miners and gold producers strengthened: BHP climbed about 1.8% to $43.15, Newcrest rose about 2% to $37.10, and Rio Tinto firmed to $81.53. The article links the broader market uplift to renewed global optimism.

What role did European banks and proposed debt measures play in market sentiment?

Market confidence was supported by reports that German banks agreed to roll over about US$10 billion in Greek debt and by a French proposal for banks to reinvest half their Greek debt into 30‑year bonds. Those measures were seen as reducing near‑term financial stress.

How did Australia’s big banks react to the market boost from Greece?

The top four Australian banks were stronger, with Commonwealth Bank leading the gains—rising about 1.1% to $51.37—reflecting the broad market uplift tied to improved risk sentiment after the Greek vote news.

What should everyday investors watch next after this Greek debt vote-related market move?

Investors should monitor the outcome of Greece’s parliamentary vote and any lender decisions on new loans, since those developments directly affected markets in the article. Also watch currency moves (AUD/USD), global oil prices, and forecasts for domestic interest rates—factors cited by strategists that can influence Australian stocks.