News that Greek leaders had clinched a long-stalled deal just hours before a key meeting with the country’s financial backers encouraged investors to take on some risk, driving down prices of safe-haven US Treasuries.
Oil rallied more than one per cent on the agreement, which is crucial for Greece to secure a €130 billion (RM520 billion) bailout from the European Union and the International Monetary Fund.
Still, investors wondered whether Greece’s promises will be enough to secure the funds, as well as what contribution the European Central Bank will offer in the restructuring of Greek debt.
“There is still a fair amount of scepticism that these agreements won’t amount to action, given the history,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “The market’s taking a wait-and-see approach.”
Adding to the uncertainty, Dutch Finance Minister Jan Kees de Jager said a final decision on a second bailout package for Greece will not be taken yesterday.
On Wall Street, investors seemed tempted to take some profits after weeks of gains, keeping a lid on key stock indexes.
“There is definitely a whiff of ‘sell the news’ in the air,” said Michael Marrale, managing director and head of sales trading at RBC Capital Markets in New York. “We’ve climbed this wall of worry and the first reaction for people is to hit the sell button.”
After spending most of the morning session little changed, the Dow Jones industrial average was up 26.19 points, or 0.20 per cent, at 12,910.14. The Standard & Poor’s 500 Index rose 3.64 points, or 0.27 per cent, to 1,353.60. The Nasdaq Composite Index gained 12.16 points, or 0.42 per cent, at 2,928.02.
In Europe, the FTSEurofirst 300 index of top shares closed 0.25 per cent higher, with cyclical shares such as those of automakers were in high demand.
“The market has potential to go up further. Economic support is there and earnings are continuing to do well,” said Anko Beldsnijder, managing director at MainFirst Asset Management, which manages €1 billion.
World stocks measured by the MSCI All-Country World Index gained 0.19 per cent.
The euro strengthened 0.2 per cent to US$1.3289, after hitting a two-month high of US$1.3321.
Also supporting the euro zone common currency were comments from ECB President Mario Draghi, who said the zone’s outlook, while uncertain, had stabilised.
“That poured a little cold water on expectations of a March rate cut,” said Adnan Akant, head of foreign exchange at Fischer Francis Trees & Watts, with US$48 billion (RM146 billion) in assets.
Benchmark 10-year US Treasury notes fell 21/32 in price, which took their yield up to 2.05 per cent. Lower-than-expected claims for unemployment benefits added to the perception that the US labour market is improving, also reducing the appeal of Treasuries.
Prices of 30-year Treasuries fell one point, taking the yield up to 3.20 per cent. They trimmed part of their losses in the afternoon, after a well-bid auction of 30-year bonds.
US crude oil prices rose 1.0 per cent to US$99.74 a barrel, after rising to more than US$100 in the third day of gains. — Reuters
