Equity Markets Perk Up Despite Confusion Over Greece
Today's financial recap and tomorrow's financial outlook.
Greece-related headlines once again dominated the newsflow ahead of Wednesday's emergency meeting of eurozone finance officials.
Greek Finance Minister Yanis Varoufakis said yesterday the government will implement 70% of reforms included in the current bailout agreement. This was a major change in tone from the weekend, when Prime Minster Alexis Tsipras ruled out an extension of the current bailout program, making various demands including the payment of World War II reparations from Germany.
Meanwhile, German Finance Minister Wolfgang Schaeuble denied media reports that the European Commission would give Greece six more months to work out an aid deal. And European Commission spokeswoman Mina Andreeva said "we have low expectations that any final agreement will be reached tomorrow or at the European Council."
Nonetheless, markets took an optimistic tone. The Athens Stock Exchange finished up 8%, and the 10-year Greek government bond yield dropped over 50 basis points. Italian and Spanish 10-year yields tightened against the German Bund, and most European equity markets were positive.
In Asia, for the second straight day, China's Shanghai Composite rose in the face of negative economic data. Its CPI hit a 5-year low of 0.8%, which was below the 1.0% consensus.
US markets also followed through, with the S&P 500 rising 0.7% to 2060.40, while the Volatility Index (VIX) fell 7.3% to 17.19.
Energy was the worst performing major sector today as crude oil fell 5%. The International Energy Agency (IEA) said it expects continued downward pressure on oil prices as supplies are still abundant.
On the bull side, biotech and utilities stocks showed significant outperformance, while tech also shined as Apple (AAPL) broke out to a new all-time intraday high of $122.15.
In earnings news, Coca-Cola (KO) rose 2.8% after the beverage giant beat analysts' fourth-quarter revenue and earnings expectations.
Tomorrow's Financial Outlook
The biggest pressing market issue remains the Eurogroup meeting on Greece. If there is no resolution, expected enormous volatility across all markets. The situation remains extremely fluid due to the constant newsflow, but as it stands now, traders do not seem very worried.
Additionally, Ukraine/Russia has once again emerged as a hot-button issue as fighting has intensified.
While earnings season is largely wrapped up, a few big names will report tomorrow including PepsiCo (PEP), Time Warner (TWX), and Cisco Systems (CSCO).
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