Tags: stocks | euro | Europe | Greece

Stocks, Euro Trim Advances as Europe Shares Rally on Greece

Monday, 22 June 2015 01:21 PM

U.S. stocks pared gains after the Standard & Poor’s 500 Index rose within a point of a record, while the euro erased an advance versus the dollar. Greek bonds jumped on optimism the country’s debt crisis will end.

The S&P 500 rose 0.6 percent at 12:34 p.m. in New York, curbing a rally of 0.9 percent. The Stoxx Europe 600 Index jumped 2.3 percent, the most since May 8. Yields on 10-year Treasury notes rose nine basis points to 2.35 percent. Greek 10- year yields sank 150 basis points while the nation’s equity index surged 9 percent. The euro was little changed at $1.1356.

European policy makers expressed confidence that a deal with was within reach after Greece submitted a set of proposals they said could end a five-month standoff over aid. A surge in corporate merger activity also boosted equities.

“The risk-on mood is driving markets today, not only in bonds but also in equities,” said Patrick Jacq, a senior fixed- income strategist at BNP Paribas SA in Paris. “Clearly the market is playing a positive outcome. But this doesn’t mean we’re going to see an agreement. As long as we don’t have an official agreement between Greece and its creditors the situation remains vulnerable.”

Record Watch

The S&P 500 rose as much as 0.9 percent to within a point of its May 21 record. The index is coming off its best week since April, climbing 0.8 percent after Federal Reserve Chair Janet Yellen signaled the central bank won’t be raising rates quickly.

Data Monday showed previously owned U.S. homes sold in May at the fastest pace since November 2009, adding to evidence the economy will be strong enough to withstand the first rate increase since 2006.

The S&P 500 fell as much as 2.4 percent from its May high as the threat of tighter monetary policy spooked investors amid data showing the U.S. economy contracted in the first quarter. Three rounds of Fed bond purchases and near-zero interest rates helped propel the S&P 500 higher by more than 200 percent during the six-year bull market.

Merger Activity

Deal activity boosted benchmark indexes Monday. Williams Cos. surged 24 percent after rejecting a $48 billion stock-based takeover offer from pipeline magnate Kelcy Warren. Cigna Corp. jumped 6.5 percent after rejecting Anthem Inc.’s $47 billion takeover bid.

Banks led Greece’s ASE Index up the most since February for the biggest gain among western-European markets. The country is facing a June 30 deadline to make payments to creditors as investors speculate a monthslong standoff is nearing a conclusion.

The European Central Bank raised emergency funding for Greek lenders for the third time in less than a week, people familiar with the decision said.

Higher-yielding European debt rallied, with Italian bonds climbing the most in more than a year while German 10-year bunds retreated. Spanish debt gained, sending the 10-year rate down by 13 basis points to 2.15 percent.

Europe Assets

European bonds fluctuated last week, with Spain’s 10-year yield swinging by more than 10 basis points every day, largely in reaction to headlines on Greece.

If an agreement is reached, German yields “could push above 90 basis points and we can see further spread compression,” Jacq said. “The market’s moving in this direction but not fully pricing in an agreement.”

In Europe, Bouygues SA jumped 14 percent and Altice SA rallied 15 percent after Patrick Drahi’s company said its cable and wireless unit has made an offer to buy France’s third- largest mobile-phone company from Bouygues.

Smaller carrier Iliad SA rose 13 percent as saying it’s in exclusive talks with Altice’s Numericable-SFR to acquire assets. Orange SA gained 7 percent.

Sky Plc added 3.7 percent after a report that the Murdoch family rejected two takeover bids for its stake in the U.K. company.

The MSCI Emerging Markets Index rose the most in two months, as equity gauges in Hong Kong, India, the Czech Republic and Poland gained at least 1.2 percent.

The Hang Seng China Enterprises Index rebounded from the steepest weekly drop since May 2012. Mainland markets were shut Monday for a holiday.

The yen declined for the first time in three days, weakening 0.4 percent to 123.17 per dollar. The euro added 0.4 percent versus the yen.

West Texas Intermediate crude slid 0.6 percent to $59.25 a barrel in New York. Brent fell 0.6 percent to $62.66.

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U.S. stocks pared gains after the Standard Poor's 500 Index rose within a point of a record, while the euro erased an advance versus the dollar. Greek bonds jumped on optimism the country's debt crisis will end. The S P 500 rose 0.6 percent at 12:34 p.m. in New York,...
stocks, euro, Europe, Greece
Monday, 22 June 2015 01:21 PM
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