13 Feb 2012: Greece passes austerity measures; violence erupts in Athens

INDICES POINTS CHANGE
FTSE 100 5908 Up 96bp
S&P 500 1342 Down 69bp
NIFTY 50 India 5390 Up 16bp

Major Stories

  • Greece passes vote amidst violence
    • Greece’s lawmakers have agreed to the tough austerity package to avoid default which sparked violence in streets in Central Athens
    • The vote was passed with 199 votes in favour to 74 against
    • 17 buildings in Central Athens were set ablaze by extremist rioters
    • Regardless of who wins the next general election in Greece, all party leaders have to sign to confirm that the austerity measures will be implemented; The EU and IMF confirmed that no funds would be released until all documents were signed by all party leaders
    • These measures include Euro 300bn in pension cuts, reduction of minimum wage by 22% to Euro 560/month, and 150000 public-sector job cuts in the next 3 years
  • China instructs banks to roll-over loans
    • China has instructed banks to implement a massive roll-over of loans to local govts, delaying the maturing of debts for now
    • China’s provinces and cities are saddled with debt worth Remnibi 10.7 trillion which matures within the next 3 years
    • Since the principal on many of the loans is not repayable, many banks have extended loans to avoid default
    • While some loans are still expected to ‘go bad’, the immediate problem of large-scale defaults can be avoided, while Beijing works out a better fix
  • Markets
    • Euro is up against Dollar, currently at $1.32 per Euro
    • Stocks: FTSE All-World is up 0.4%, with banking gaining 1.2%; FTSE Eurofirst 300 is up 0.4%; S&P 500 is expected to open 0.5% up
    • Debt: US 10-year yield is up to under 2.17% now
    • Commodities: Gold is up 0.5 % to $1729/ounce; Brent Crude is up 0.9% to $118.40/barrel
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