Greek Prime Minister George Papandreou won a vote of confidence, bolstering his new government’s chances of pushing through austerity measures to secure further international financial aid for the country. A total of 155 supported the motion in the 300-seat parliament in Athens early this morning. Papandreou reshuffled his Cabinet and sought the approval of the chamber after fending off a revolt within his socialist Pasok party last week. After the vote, police used tear gas and stun grenades to disperse thousands ofcitizens protesting planned budget cuts.
US rating agency, Fitch, has said most of Europe’s banksdo not have a large amount of direct exposure to Greece, holding only 37bn in the sovereign’s bonds. Banks should be able to the immediate credit, market and liquidity risks with only minor, if any, negative rating actions,” the agency said of the situation in Greece. But this could change due to “the risk of a disorderly contagion spiral”, it added.
EUROPEAN stocks are seen steadying today following the previous session’s rally, after Greece’s government survived a vote of confidence and as investors shift their focus to the US Fed’s rate decision and briefing. Investors will hope to learn more about US policy to deal with an economy that shows signs of slowing, although Chairman Ben Bernanke probably will continue to argue the slowdown is temporary.
ASIAN stocks rose overnight, following the Greek PM’s confidence vote win. The Nikkei, which broke through strong resistance at 9,600 points, is set for its biggest advance this month. The MSCI Asia Pacific Index has lost 5.1% this year, compared with a gain of 3% by the S&P 500 and a drop of 2.3% by the Stoxx Europe 600 Index, which encourages analysts to believe that stocks in the region are very oversold.
THE S&P 500 and the Stoxx Europe 600 indexes yesterday posted their biggest advances since April 20th.
THE EURO weakened from a one-week high against the dollar on concern the Greek PM will fail to pass austerity measures even after winning a confidence vote in parliament. The dollar index, which tracks the dollar against a basket of major currencies, fell to a one-week low overnight, and is well off last week’s peak.
Oil fell New York on signs that a drop in US stockpiles will be smaller than forecast and speculation that OPEC countries including Saudi Arabia are increasing supplies. Pressure is also on oil prices as traders are not confident that the Greek PM will get the austerity measures through.
GOLD held steady overnight ahead of the outcome of a US Federal Reserve meeting, which could weigh on the dollar, while worries the Greek debt crisis may affect other countries is likely to prompt investors to consider the safe-haven precious metal.