Worldwide Stock Markets Surge as Greek Negotiations Back on Track

Greece’s latest budget proposal moved the struggling country away from the risk of defaulting on its loans and leaving the euro bloc on Monday. Eurozone leaders welcomed the proposal as good starting point to an agreement that would allow Greece to receive frozen aid. Top Eurozone official’s described the Greek proposal as a “positive step forward”. The agreement likely includes higher taxes and welfare cuts but no pension and wage cuts as previously requested by creditors. Greek and Eurozone stock markets surged on Monday as the possibility of ending the crisis plaguing the bloc became feasible. European stock markets surged on the news. While the UK’s FTSE rose 1.72% to trade at 6825.67, both the German DAX and French CAC 40 rose 3.81%, trading at 11469.5 and 4998.61, respectively. Greek stocks showed the strongest gains, adding 9% on Monday.

The U.S. stock market reacted as well, lifted by gains in the healthcare and financial sectors as well as the prospect of ending Greece’s financial woes. The healthcare sector has already risen 26% this year, showing the strongest performance among the S&P sectors. The Dow Jones industrial average rose 103.83 points (0.6%) to close the day at 18119.78 and the S&P 500 index rose 12.86 points to close the day at 2122.85. The NASDAQ showed the strongest performance on Monday, rising 36.97 points (0.7%) to close the day at a new record-high of 5153.87. However, more factors stand behind Wall-Street’s relative strength. The Federal Reserve’s cautious approach to raising interest rates has minimized the negative affect that a potential interest rate increase usually has. Recent reports indicate that the Federal Reserve is likely to raise interest rates over time rather than in one swift adjustment.

The dollar strengthened overnight, rising 0.3% against its major peer currencies. The gains followed a pickup in front-end U.S. bond yielding, indicating that the Federal Reserve’s policy outlook played a part in the gains. Positive economic data also helped the dollar surge. Existing home sales reports have beaten expectations, showing the strongest numbers since 2009.

Traders are looking forward for today’s release of Eurozone manufacturing data. Later in the session, U.S. Durable Goods orders data will be released, offering an estimate of the change in ordering in the manufacturing sector. Tomorrow, German business climate data will be released, followed by U.S. GDP data later in the day.