While you were sleeping: Greece, US deals bolster mood

Tuesday 23rd June 2015

Wall Street rose, pushing the Nasdaq Composite Index to a record, amid optimism Greece and its international lenders are finally closing in on a deal that will prevent the nation’s default and exit from the eurozone.

Eurozone leaders are meeting in an emergency summit in Brussels on Greece amid optimism progress is being made towards an agreement before the deadline after the debt-crushed country offered fresh reform plans.

"We will work very hard in the next few days, the institutions with the Greek government, to get that deal this week," Jeroen Dijsselbloem, chairman of the 19 nation Eurogroup, told a news conference, Reuters reported.

Stocks on both sides of the Atlantic lifted as a result. In late trading in New York, the Dow Jones Industrial Average rose 0.62 percent, the Standard & Poor’s 500 Index gained 0.59 percent, while the Nasdaq Composite Index added 0.63 percent. Earlier in the session, the Nasdaq climbed to a record 5,162.13.

In Europe, the Stoxx 600 Index ended the session with a 2.3 percent advance from the previous close, while Greece’s ASE Index jumped 9 percent. The UK’s FTSE 100 Index gained 1.7 percent, while both France’s CAC 40 Index and Germany’s DAX rallied 3.8 percent.

"Now you're seeing the leaders of [eurozone] countries meeting to reach a deal and the hope that a deal is on the horizon is reflected in the rally today," Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, told Reuters.

Gains in shares of Merck and those of Goldman Sachs, recently trading 1.5 percent and 1.4 percent higher respectively, led the Dow higher.

Also buoying the mood is rampant merger and acquisition activity.

Shares of Cigna rallied, last trading 5.6 percent stronger, after it rejected a US$47 billion takeover offer from Anthem. And shares of Williams soared, last 24 percent higher, after it rebuffed a US$48 billion buyout offer.

The latest US housing data also offered reason for optimism. A National Association of Realtors report showed existing home sales climbed 5.1 percent to an annual rate of 5.35 million units, the highest level since November 2009.

"Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers," Lawrence Yun, NAR chief economist, said in a statement.

"However, overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double digit appreciation,” Yun added. “Without solid gains in new home construction, prices will likely stay elevated, even with higher mortgage rates above 4 percent."

BusinessDesk.co.nz

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