Markets rise as Greek bailout deal gets backing: Morning market insights

US stocks rose slightly overnight as short-term concerns over Greece eased when a majority of creditors opted to accept the bond swap ‘haircut’, buoying markets and giving the S&P500 the best two-day advance of 2012.

Wall Street

On the New York Stock Exchange, the Dow Jones Industrial Average was up 0.55% or 70.61 points to 12907.90.

The S&P500 Index rose 0.98% or 13.28 points to 1365.91.

The tech-heavy NASDAQ Index jumped 1.18% or 34.73 points to 2970.42.

The West Texas Intermediate (WTI) oil price rose  0.52% overnight and is now trading at US$106.71 per barrel.

Gold was up 1.03% overnight to US$1701.30 an ounce.

The Australian dollar as risk receded, with one Australian dollar buying $USD1.0647 at 7am.

Europe

UK and European indexes had significant rises overnight.

London FTSE 100 closed up 1.18% to 5859.73.

Frankfurt DAX closed up 2.45% or 163.43 points, to 6834.54.

The European blue chip Stoxx50 index rose 0.71% to 2514.22.

Support strong for Greek bailout

There were reports this morning that 85% of Greek creditors had accepted the bond-swap haircut deal by the deadline (7am Australian Eastern Standard time), despite hopes for a 95% acceptance rate.

“Greece has no choice and the bondholders have no choice,” said Stanley Nabi, New York-based vice-chairman of Silvercrest Asset Management Group told Bloomberg. “They’re both in the mud. I believe they will accept the swap. That will cause a moderate sigh of relief in the market. How long it will extend? That’s the big question mark.”

Though the markets showed short-term relief, the issue is still to be resolved, with Greek elections due in April. The bailout and austerity measures have proven deeply unpopular. Greek unemployment is more than 20% and GDP is still shrinking — as is the Greek government’s ability to make future payments.