Local bourse will be the first to react
AUSTRALIAN shareholders will be among the first to respond to the outcome of the Greek elections which were held yesterday, just as the Prime Minister, Julia Gillard, flew out to Mexico for a crucial two-day meeting of G20 leaders.
AUSTRALIAN shareholders will be among the first to respond to the outcome of the Greek elections which were held yesterday, just as the Prime Minister, Julia Gillard, flew out to Mexico for a crucial two-day meeting of G20 leaders.Local investors will know the preliminary results of the Greek elections early this morning, but a clearer idea of the winner will emerge by 11am, one hour after the market opens.Analysts have warned that the results could determine the fate of the eurozone and that global financial markets would react severely if Greece's far-left Syriza party wins power."That would be extremely troubling from the point of view of financial markets," Russell Jones, the global head of fixed income strategy at Westpac, told the ABC's Inside Business."I think the response to that would be [to] 'sell first and ask questions later' because this is a group of politicians who really want to unwind a lot of the austerity which has been put in place in Greece."Global markets closed higher on Friday on the expectation that Greece's pro-austerity New Democracy party would win the election, even though final polls on June 1 showed that no party could expect to win a majority.The election is a re-run of the country's ballot on May 6 which failed to produce a government.Despite a volatile week, the local S&P/ASX200 gained 15 points on Friday, or 0.4 per cent, while markets in the US (up 0.9 per cent), London (0.2 per cent), and Germany (up 1.5 per cent) closed higher.World leaders meet in Mexico today for two days of talks about the state of the global economy, the fate of the euro and the prospect for growth in the US and China.The French President, Francois Hollande, has urged the European Union to spend ?120 billion ($150 billion) by the end of the year to boost growth in the region.The federal Treasurer, Wayne Swan, urged Europe's leaders yesterday to do what they could to protect global growth. "Whatever the result [of the Greek elections], Europe's challenges remain profound," he said in his weekly economics note."The region's policymakers must continue with their reforms to boost growth and reduce debt, as well as reinforcing their financial firewalls."BHP Billiton and Rio Tinto along with Australian banks will feel the effects of the Greek election result, while other stocks coming under scrutiny this week include Fairfax Media (publisher of the Herald), after the mining billionaire Gina Rinehart increased her share in the company on Friday evening from 13 per cent to at least 18 per cent.The newspaper group, alongside its competitor News Corp, is under pressure to cut costs in the Australian market to make up for a slide in revenue.Another stock likely to come under scrutiny is Echo Entertainment Group, which owns the Star casino in Sydney, and its new chairman, John O'Neill.The billionaire and Crown Casino owner James Packer has taken a 10 per cent stake in the group, and it undertook a $454 million equity raising and downgraded earnings on Friday.