The approval of austerity measures by Greece’s parliament remains the top story of the morning. The news has brought about renewed buying interest both at home and abroad. Germany’s DAX is presently up 0.9%. Commerzbank is a top performer there; the stock is boasting a gain of about 5%. Automakers have also made an impressive advance. France’s CAC is currently up 0.5%. Veolia Environnement is a primary leader there. ArcelorMittal (MT 22.70, +0.50) is also providing support. Alcatel-Lucent (ALU 2.13, -0.06) has been a notable laggard. Britain’s FTSE is boasting a 1.1% gain with help from financial plays like Lloyds Group (LYG 2.22, +0.09), Barclays (BCS 15.13, +0.32), and Standard Chartered. Materials plays like Anglo American, Xstrata, and Rio Tinto (RIO 61.08, +1.75) are also performing well. Asia’s major averages staged gains in overnight action. Specifically, Japan’s Nikkei settled with a 0.6% gain. Shinsei Bank and Mizuho Financial (MFG 3.14, +0.00) were sources of strength. Softbank complemented their efforts. Participants in Japan generally shrugged off a disappointing reading on fourth quarter economic activity that showed a 0.6% decline in GDP. That comes after a 1.7% increase in the prior quarter. Hong Kong’s Hang Seng scored a 0.5% gain. Ping An Insurance was a top performer there. Property plays were pressured, however. Mainland China’s Shanghai Composite closed at the flat line. The country’s Premier made not that economic policy could experience some adjustments in the first quarter.
Investors on Monday cheered the Greek parliament’s passage of tough new austerity measures, but economists say plenty could still go wrong as the country tries to find its economic footing amid growing civil unrest and political tensions.
While protesters hurled Molotov cocktails and clashed with police amid scenes of burning buildings, Greece’s parliament voted 199 to 74 just past midnight on Monday to approve new spending cuts and other austerity measures demanded by the nation’s international lenders.
The approval means Greece will likely receive a second bailout and avert a March default.
“The big question mark relates to when Greece will be able to return to positive economic growth. We reckon this will unlikely materialize before [the second half of 2013]; a long time framework over which Greek citizens might get increasingly disaffected to the adjustment package and to those imposing it,” said Paolo Pizzoli, senior economist at ING Bank in Milan.
Asian and European equities rallied. U.S. stock futures pointed to a higher open on Wall Street after traders, nervous over the outcome of the Greek vote, sent U.S. stocks to their steepest loss of the year on Friday. Outlook for U.S. stocks.
The euro rallied in the immediate aftermath of the vote but failed to sustain a push above the $1.33 level versus the dollar. The shared currency changed hands at $1.3264 in recent action, up 0.3% from Friday.
The far-reaching austerity measures include another round of massive spending cuts, a 22% cut in the private-sector minimum wage and thousands of public-sector layoffs. They come after data last week showed Greek unemployment topped 20% in November.
Greece is entering its fifth year of recession.
Stocks to Watch
Apple Inc. (AAPL) sued Motorola Mobility Inc. (MMI), saying Apple’s iPhone 4S is protected under a license agreement from Qualcomm Inc. (QCOM). The lawsuit, which was filed Friday, is part of an effort by the Cupertino, Calif., consumer-electronics giant to ward off any injunctions from Motorola, according to the court documents.
Standard & Poor’s Ratings Services raised its credit rating on Cheniere Energy Inc. (LNG) a notch, pointing to the liquefied-natural-gas company’s recent deleveraging measures.
ITT Corp. (ITT) pushed back the date it plans to report quarterly earnings by two weeks, citing the complexity of reviewing financial data following the industrial conglomerate’s recent spinoffs. Thought the company still said its 2011 revenue grew, the results fall slightly short of analysts’ expectations.
Overnight Headlines (Links)
Bond Markets Welcome Passage of Greek Austerity Package
Pakistani Prime Minister Charged
‘Co-Co’ Debt Finds Favor in Euro Zone
Economics/FedSpeak
- No major economic data on today’s calendar.
- San Francisco Fed President John Williams speaks
Key Earnings
- Charles River Labs
- Diebold
- Fidelity Natl Info
- Health Mgmt Associate
- Masco
- Nordic American Tankers
- WW Grainger (monthly)