AGREEMENT on a second bailout deal for Greece buoyed the sharemarket yesterday, with all sectors closing higher.
The S&P/ASX 200 Index put on 35.1 points, or
0.82 per cent, to 4291.2.
The news reached the market at about 2pm, immediately lifting stocks.
The deal is designed to reduce the ratio of Greek government debt to gross domestic product to
120.5 per cent by 2020. It will also force private holders of Greek debt to take a 53 per cent write-down on their investments.
Patersons Securities associate director John Curtin said the news was key to the market's performance.
"The positive is that they've got the deal done unlike other deals earlier than the deadline. So, that's going to be good for confidence," he said.
"It also gets it out of the way because the next big hurdle now will be looking at the Italian bond renewal that needs to be done by the end of March."
Metals markets climbed on the news, driving BHP Billiton 42?, or 1.2 per cent, higher to $36.44. Rio Tinto gained $1.12, or 1.7 per cent, to $69.16.
"It's really the classic case that the top end of our market is positively affected," Mr Curtin said.
The big banks strengthened, National Australia Bank leading the way with a gain of 22?, or 1 per cent, to $23.40.
Commonwealth Bank performed strongly, almost matching Monday's fall when the shares went ex-dividend. The shares finished 37? higher at $49.47. "Within two days they've nearly clawed back all of the dividend," Mr Curtin said.
Wesfarmers yesterday traded without its 70? dividend but also clawed back most of the fall to finish just 20? lower at $29.65.
OneSteel, Australia's second-biggest steel maker, surged 9?, or 12.3 per cent, to 82? after it posted a $74 million first-half net loss but said it was bullish about growth through its mining interests.
Train manufacturer and engineering company Downer EDI gained 22?, or 5.9 per cent, to $3.94 after it reported a return to profitability, helped by strong gains in its mining division, and said it expected solid results this year.
Spot gold was up $US3.94 at $US1739.55 an ounce. Newcrest rose 20? to $35.10.
At 5pm, the dollar was at $US1.0738, down from Monday's close of $US1.0777 despite the deal on Greece's next round of bailout funds.
"The market kind of expected it," said Commonwealth Bank currency strategist Joseph Capurso. "The euro's climbed a little bit, but only by about half a cent or so."
Frequently Asked Questions about this Article…
How did the Greek bailout deal affect the Australian sharemarket (ASX) on the day of the announcement?
The S&P/ASX 200 rose immediately after the news, adding 35.1 points (about 0.82%) to finish at 4,291.2 as the bailout agreement boosted investor confidence and lifted all sectors.
Which mining and metals stocks benefited from the Greek bailout news?
Metals and mining stocks climbed on the news. BHP Billiton rose about 1.2% to $36.44 and Rio Tinto gained around $1.12 (about 1.7%) to $69.16, with analysts saying the top end of the market was positively affected.
What happened to major Australian bank shares after the bailout announcement?
Big bank shares strengthened; National Australia Bank led the gains with about a 1% lift to $23.40. Commonwealth Bank also performed strongly and finished the day at $49.47, nearly clawing back recent dividend-driven weakness.
How did industrial and resources-related companies like Wesfarmers, OneSteel and Downer EDI react?
Wesfarmers, trading ex-dividend, recovered much of its recent fall to finish around $29.65. OneSteel surged (about 12.3%) after reporting a $74 million first-half net loss but expressing bullish growth through its mining interests. Downer EDI climbed roughly 5.9% to $3.94 after returning to profitability and flagging solid prospects.
Did commodity prices or gold move because of the bailout news, and how did gold miners respond?
Spot gold rose by about US$3.94 to US$1,739.55 an ounce, and gold producer Newcrest saw gains, finishing at $35.10 as metals markets strengthened on the positive sentiment.
What did market commentators say about the significance of the Greece deal for investors?
Patersons Securities associate director John Curtin said the deal was key for market performance because it was completed earlier than the deadline, boosting confidence. He also noted the next major focus would be Italy's bond renewal by the end of March. Commonwealth Bank currency strategist Joseph Capurso observed that the market largely expected the deal and the euro only climbed modestly.
How did the Australian dollar react to the Greek bailout announcement?
The Australian dollar slipped slightly on the day, trading at US$1.0738 at 5pm, down from Monday's close of US$1.0777 despite the bailout news.
What should everyday investors take away from the market reaction to the Greek bailout deal?
The main takeaways are that geopolitical or sovereign-debt developments can move markets quickly, positive resolution of major risks can lift broad sectors (especially miners and banks), and investors should watch follow-up risks—such as Italy's upcoming bond renewal—while keeping focus on company fundamentals and valuations.
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