Markets remain cautious despite the deal between Greece and its creditors

Global financial markets welcomed the deal between Greece and its creditors but remained highly cautious given the lingering uncertainty about the path ahead for Athens. While Greece was given a four month loan extension, that is less time than what it seems within which they need to construct an alternative reform agenda .

Summary

  • Global financial markets welcomed the deal between Greece and its creditors but remained highly cautious given the lingering uncertainty about the path ahead for Athens. While Greece was given a four month loan extension, that is considering less time than what it seems within which they need to construct an alternative reform agenda which pleases its coalition partner, the electorate and the European authorities and it is not inconceivable that we will be back to increased volatility as that deadline approaches. However, overnight the mood was positive in Europe, although the there were few spill over effects into other markets. Meanwhile, investors were preparing for the US Fed Chair's testimony to the US Congress later this week and will be looking for any hints about delays to the expected rise in US rates in June. Elsewhere, there was not much on the macro front and the corporate space and with around 90 minutes left in the US session, the MSCI World Index is higher ( 0.2%) with advances in Europe ( 0.9%) and Asia ( 0.1%) offset by a decline in the US (-0.1%).
  • In other financial markets, 10-year government bond yields were mixed (US Treasuries down to 2.07%, UK gilts higher at 1.80% and Japanese bonds were steady at 0.38%), high beta currencies depreciated against a stronger Greenback (AUD -0.5% to 78.01 and the Euro -0.3% to 113.47) and commodities were mostly lower although the losses were modest other than in energy:
    • oil -3.2% to USD49.15 per barrel. 
    • gold -0.4% to USD1,199.70 per troy ounce.
    • Dr copper -0.2% at USC259 per pound.
    • iron ore -0.1% to USD62.75 per metric tonne in US futures markets.
    • base metals were mostly lower (only nickel rose).

    The SPI suggests that the Australian market will open 12 points higher ( 0.2%) at 10am AEST.


    Market news

    Asia - Asian sharemarkets closed higher in yet another quiet trading session. Several key markets came on-line yesterday as Chinese New Year celebrations concluded, but overall index trends were modest despite the Greek situation being resolved for the time being. There was little macro data of note, which meant that indices drifted from the opening with no individual bourse able to record gains beyond 0.5%. There was some early focus on the Bank of Japan minutes, but these seem to have little direct market impact. Continued violence in Ukraine also failed to alter the mood with investors seemingly looking around for substantial trends to move markets behind, but none really surfaced. By the regional closing bell in Mumbai, the MSCI Asia Index was slightly higher ( 0.1%) with advances in Australia ( 0.5%), Korea ( 0.4%), Japan ( 0.2%) and Hong Kong ( 0.02%) offset by retreats in Singapore (-0.4%) and India (-0.8%), whereas China and Taiwan remained closed for national holidays. In the local market the S&P/ASX 300 Index was 26 points higher ( 0.5% to 5,839) with nine sectors closing in the black led by consumer discretionary ( 0.9%), financials ( 0.7%) and healthcare ( 0.6%), whereas materials (-0.3%) was the sole decliner as stock prices caught up with weekend movements in commodity prices.

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