On 23 February, 2015 – Most European markets rose as Greece secured an extension to its bailout agreement

While stocks in the Asia Pacific and Europe regions mostly rallied on Friday’s agreement between Greece and the EU finance ministers, shares in the US retreated as investors waited for Fed Chair Janet Yellen’s semi-annual Congressional testimony.
United States
US shares retreated on Monday after Friday’s big gains that saw both the Dow Jones industrials and S&P close at new highs. Investors weighed the implications of a drop in existing home sales and the latest batch of corporate deal news. Investors were cautious the day before Fed Chair Janet Yellen is to give her semi-annual testimony before the Senate Banking Committee. The Dow was down 0.1% and the S&P lost 0.64 point. The Nasdaq added 0.1%. Lower oil prices dragged down energy shares.
Several offshore oil drilling and services companies declined including Ensco, Denbury Resources, Nabors Industries and Transocean. Valeant Pharmaceuticals International surged a day after the Canadian drug maker announced it has agreed to buy Salix Pharmaceuticals for about US$10 billion in cash. Valeant while shares in Salix slipped. Boeing retreated.
The National Association of Realtors reported that existing home sales tumbled 4.9% last month to a seasonally adjusted annual rate of 4.82 million. That brought sales down to their lowest level since last April. Home builder shares slumped on the news.
Greece will send a list of reforms aimed at securing a bailout extension to EU partners on Tuesday morning, missing a Monday deadline. The list must be approved by international creditors to secure a four-month loan extension. Analysts say the deal’s collapse would revive fears Greece will exit the euro. Minister of state Nikos Pappas says the list will include measures to fight tax evasion and trim the civil service. But Greek officials have also stressed that there will be policies aimed at fulfilling pre-election pledges to help those hit by years of economic crisis.
Greece’s creditors — the European Central Bank, the European Commission and the International Monetary Fund — are expected to deliver their verdict on the proposals later on Tuesday before the reforms are discussed in a conference call with Eurozone finance ministers.
Gold at the afternoon London fixing was down US$3.75 to US$1,204.50 Copper futures were down 0.25% to US$2.58. WTI spot crude was down US$1.55 to US$49.26. Dated Brent spot crude was down US$1.24 to US$58.88. The US dollar was up against the euro, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen and the pound. The Dollar Index was up 0.3%. The yields on both the US Treasury 30 year bond and the 10 year note were down 5 basis points to 2.66% and 2.06% respectively.
Europe
Most stock indices advanced Monday after Greece secured a four month extension to its bailout agreement Friday. Investors managed to shrug off a weaker than expected German Ifo business confidence reading as well as the disappointing US existing home sales report. The FTSE was virtually unchanged (down 3.04 points) while the CAC was up 0.6%, the DAX gained 0.7% and the SMI added 1.0%.
Greece reached an agreement with Eurozone creditors to extend its bailout agreement for four months after meetings on Friday. Greek finance minister Yanis Varoufakis has pledged to honor all debts and initiate reform to bring back the country to a financial stability. The minister added that the country would continue with painful reforms.
Merck and Bayer advanced. Deutsche Börse also gained on the day. Fresenius Medical Care and Fresenius were up. Lafarge gained after Holcim, which is being acquired by the French cement giant, announced its financial results. Technip dropped but Total advanced. HSBC sank after it reported a lower full year profit. Antofagasta dropped after it reduced its 2015 cash-cost forecast. Bunzl gained after the company announced increased full year profit as well as two acquisitions. PostNL climbed after the group reported a 4% rise in revenue for the fourth quarter of 2014. DS Smith PLC rallied after the company said it is acquiring Austrian peer Duropack GmbH.
The Ifo Business Climate edged up to 106.8 from January’s 106.7. The latest reading was the best since July last year, when it was 108.1.
Asia Pacific
Shares were mixed Monday after US shares surged to record highs Friday, buoyed on relief over the last minute Greek debt deal. After weeks of tension and uncertainty, Greece reached a deal on extending its bailout program for another four months, averting an immediate default. The onus now remains on Greece to propose reforms acceptable to its creditors at the EU and IMF ahead of the Monday deadline, which would be assessed and if found sufficient, could be the catalyst for a successful conclusion of the review.
The Nikkei climbed 0.7% to a fresh 15-year high after Greece’s new government softened its stance and agreed to come up with a program for implementing harsh austerity measures imposed by its lenders. Pioneer, Nippon Express, JFE Holdings, Yamaha Corp, Nippon Suisan Kaisha and Sumco were up on the day. Sosei Group advanced after it agreed to acquire UK-based Heptares Therapeutics for US$400 million. Fanuc, Inpex, Dai-ichi Life Insurance, T& D Holdings and Mitsubishi UFJ Financial Group declined. Airbag manufacturer Takata was down after US Transportation Secretary Anthony Foxx announced a US$14,000 per day fine against the company for failing to fully cooperate with the National Highway Traffic Safety Administration’s ongoing probe into the company’s defective airbags. Tokyo Electric Power declined after the company said it has detected a fresh leak of highly radioactive water at its defunct Fukushima nuclear plant.
Both the S&P/ASX and All Ordinaries added 0.5% as gains in banking stocks outweighed declines in the resource sector in the face of disappointing corporate earnings results. MacMahon Holdings plunged after the mining services provider announced the loss of A$780 million worth of work at a Fortescue Metals Group mine. BlueScope Steel slumped after the company said a recent drop in global steel prices could compress margins in Australia. BHP Billiton and Fortescue Metals Group were down while Rio Tinto advanced. The Kospi was up 0.4% as trading resumed after a long holiday weekend.
The Sensex erased early gains to end 0.9% lower as caution set in ahead of derivative contract expiry on Thursday and the Union Budget to be unveiled on Saturday. The Railway Budget will be presented on February 26 followed by Economic Survey on February 27.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Germany will post second estimate fourth quarter GDP and the Eurozone posts January harmonized index of consumer prices. In the US, December S&P Case-Shiller house price index and February consumer confidence and Richmond Fed manufacturing index will be released. Fed chair Janet Yellen gives her semi-annual monetary policy testimony to the Senate Banking Committee.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday