Equities around the globe got a bit of a boost on news that the Greek parliament approved the reform program, necessary for the Troika to sign off on the next bailout. Next up, Euro area finance ministers meet on February 15 for another extraordinary meeting on Greece and then national parliaments vote on it. Two more weeks of this – awesome. The intention is to tie it up by March 1 and we can only pray to our respective deities that this is indeed the case. It would truly be a miracle. Moves were pretty big in some cases, and in Athens, stocks rose 4.7 per cent. More modest gains were seen elsewhere with the Dax up 0.7 per cent, the CaC up 0.3 per cent and the FTSE up 0.9 per cent.
On Wall Street, moves have been decent as well overall, the S&P up 0.8 per cent (1352) so far on the back of solid gains in telecommunications, industrials and financials, although all sectors bar utilities were up. The Dow is then up 83 points to 12884, the Nasdaq is almost 1 per cent higher (2931) while our own SPI is down smalls, following a decent performance for our equities yesterday (ASX 200 up 0.9 per cent).
There wasn’t much else in the way of major news flow. It is interesting to note that the ECB aren’t buying many government bonds these days. The latest data overnight shows they bought only €59 million worth last week, down from €129 million the week before and a couple of billion here and there some weeks in January. Even without that support, Italian bond yields have been falling and last night yields were down smalls on the 10-year – 5.603 per cent on a 14 basis point range. The Spanish 10-year was down about 4-5 basis points, but they’ve been trending higher since a low of about 4.85 per cent a couple of weeks ago. That said, and as I mentioned a while back, they’ve already done about 25 per cent of their funding for the year.
There really isn’t much else of interest. US treasuries traded within a 7 basis point range to sit at 1.987 per cent (unchanged from 1630 AEDT) as I write. The 5-year is up maybe a basis point to 0.8539 per cent, while the 2-year is up over a basis point to 0.286 per cent. Aussie 3s are then off 2 ticks to 96.44, while 10s are little changed at 95.92 on a 7-tick range.
In the FX space, euro is down almost 50 pips to 1.3209 having hit a high of 1.3284. The Australian dollar is up smalls to 1.0751 and traded on a 56 pips range, so not a lot in it. Sterling too was off smalls to 1.5777 and JPY sits at 77.59.
The Aussie data out includes NAB’s business survey (1130 AEDT and for January). It’s difficult to know what confidence will do here. Europe is stabilising and the US economy is accelerating. Confidence should improve, but there is this unshakeable perception of weakness as our business leaders queue up to tell us how many people they are going to sack this year. Time will tell. But for a country whose main problem is confidence, this isn’t going to help any. These very vocal announcements will only help to keep confidence – and therefore spending, the argument goes – weak. The downside of policy activism.
Prior to that (0830 AEDT) an Assistant Governor of the RBA (Debelle) speaks "On Europe’s Effects on Australian Financial Markets”. For NZ, the QV house price series is out at 10am, while tonight we get the German Zew survey and US retail sales (for January).
Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.
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