On 22 June, 2015 – Global markets rallied on signs of progress in Greek debt talks

US markets were also supported by May existing home sales, which surged to their highest in five and a half years.
United States
US stocks closed higher Monday, with the Nasdaq ending at a record, as hopes grew that a deal would be reached in Europe that would prevent Greece from defaulting on loans. The Dow Jones industrials and S&P both gained 0.6% while the Nasdaq advanced 0.7%.
The Eurogroup remained cautious and said the proposals require detailed study and it would take several days to determine whether they can lead to an agreement. Athens needs fresh funds to avoid defaulting on a US$1.8 billion debt repayment to the International Monetary Fund on June 30, and a possible exit from the euro zone.
May existing home sales surged to their highest in five and a half years as first-time buyers piled into the market providing the latest indication that housing and overall economic activity were gathering steam in the second quarter.
Cigna was up after the health insurer rebuffed Anthem’s US$47 billion merger proposal on Sunday. Anthem also gained. Humana was up before reversing course as sources said Cigna along with Aetna are participating in an auction to acquire the company. Williams jumped after Energy Transfer Equity confirmed it had made a US$48 billion unsolicited bid for the natural gas pipeline company. Williams rejected the offer as too low. Bank of America and Citigroup increased as banks rebounded. Martha Stewart Living Omnimedia slumped after Sequential Brands Group takeover bid was below investors’ expectations. International Paper retreated to its lowest since October after an analyst said he sees more downside risk for containerboard companies amid price cuts. MeadWestvaco and Rock-Tenn slipped as well.
Gold at the afternoon London fixing was down US$17.90 to US$1,185.50. Copper futures were virtually unchanged at US$2.57. WTI spot crude was up 7 US cents to US$59.68. Dated Brent spot crude was up 21 US cents to US$63.23. The US dollar was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.6%. The yield on US Treasury 30 year bond was up 12 basis points to 3.17% while the yield on the 10 year note was up 11 basis points to 2.37%.
Europe
European markets rallied sharply on optimism that an agreement between Greece and its creditors have increased after Athens submitted a revised economic reform proposal early Monday to which the Eurogroup has responded with optimism. Eurozone finance ministers held an emergency meeting in Brussels Monday, which ended without an agreement. Another meeting has been scheduled for Thursday. The FTSE and SMI both added 1.7% while the CAC and DAX both gained 3.8%.
The new proposal submitted by Greece is seen a ‘positive step’ in the path to reaching a deal with creditors and work will start immediately with the aim of reaching a final agreement later in the week, Eurogroup President Jeroen Dijsselbloem said in the press conference following the meeting. Dijsselbloem welcomed the proposals and said they were received only Monday morning, which left little time for the institutions to go through them in detail to give an in-depth assessment. Also Monday, the European Central Bank increased the limit on the amount of emergency loans available to Greek banks to offset daily deposit outflows. It is the third time in less than a week that the ECB has raised the limit.
Automakers BMW, Daimler and Volkswagen rallied after a broker upgrade for the European auto sector. Allianz climbed also on an upgrade. Banks including Deutsche Bank, Commerzbank, BNP Paribas, Crédit Agricole and Société Générale gained. Deutsche Telekom advanced. Bouygues surged after European telecommunications company Altice reportedly offered to buy the French mobile operator for about US$11.4 billion. Altice jumped in Amsterdam. Orange finished higher. Carnival climbed on a broker upgrade. Aggreko gained after the company announced that it will reorganize into two business units — Aggreko Rental Solutions and Aggreko Power Solutions. Sky advanced — the Murdoch family has reportedly rebuffed offers from both Vivendi and Vodafone for its stake in Sky.
Asia Pacific
Asian stock markets started the week on a positive note after Greek Prime Minister Alexis Tsipras presented new reform proposals to foreign creditors that were aimed at reaching a “definitive solution” to break a deadlock that has pushed the country to the brink of bankruptcy. Investors were optimistic that Greece’s creditors will make some concession and agree to discuss a restructuring of Greece’s debt. Markets in mainland China were closed for the Dragon Boat Festival after steep losses last week. The Hang Seng was up 1.2% on hopes that a deal to end Greece’s debt crisis is within sight.
The Nikkei added 1.3% and in the process hit a two-week high ahead of talks between Greece and its creditors. Banks including Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial advanced. Canon, Kyocera, Nikon and Sony rallied after the yen declined against the US dollar. ANA Holdings climbed on a Nikkei report that it will not raise additional capital through stock offerings to buy aircraft and make other investments. Shares of Honda Motor also rallied despite the carmaker confirming its eighth death linked to faulty airbags made by Takata. Tokyo Electron retreated after its merger deal with US-based Applied Materials failed to win regulatory approval.
Both the S&P/ASX and All Ordinaries were up 0.2%. The big four banks advanced while miners were mixed. The Kospi gained 0.4% after Greece presented new reform proposals to its creditors. The Sensex added 1.5% buoyed by investor optimism that Greece and its international creditors will strike a last-minute deal at a crucial emergency Eurozone summit. Softer oil prices, the rupee’s strength against the US dollar and reassuring comments by Finance Minister Arun Jaitley ruling out the use of retrospective taxation also boosted investor sentiment.
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*
June flash manufacturing PMIs will be released for China, Japan, the Eurozone, France, Germany and the US. The UK posts CBI industrial trends for June. In the US, May durable goods orders, FHFA housing prices and May new home sales will be reported.*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday