The Greek parliament bought time yesterday, voting for austerity measures in return for a vital 12bn installment of aid that will stave off national bankruptcy for a few months. The 300 deputies must vote again today for laws to implement the 28bn cuts they passed yesterday. Even if they become law, few believe the government is capable of implementing the programme, which involves 2bn in tax rises and 1.19bn in benefits cuts this year, as well as 50bn of privatisations and savings of 3bn from a crackdown on tax evasion over four years.
The London Stock Exchange global expansion plans were thrown into disarray yesterday as it was forced to abandon its £4.3bn bid to merge with Canada’s TMX group. The LSE scrapped the merger less than 24 hours before a crunch TMX shareholder vote, after early results showed that it failed to win the critical two-thirds level of support required by Canadian law.
THE NIKKEI stock average ran out of steam after hitting a fresh seven week peak to stand flat at midday in Tokyo today. However, the Nikkei is still on its way to end the quarter slightly higher, beating many of its peers, supported by signs that Japanese companies are recovering fast from damage after the earthquake in March.
EUROPEAN shares are set to rise for a fourth straight day today with investors risk appetite rising on expectations that the initial positive vote by Greece’s parliament on austerity measures will help the country in avoiding default.
THE EURO rose to a three week high against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation and as the immediate risk of default by Greece subsided. The euro has increased 0.8% against the dollar this month and is up 2.5% for the quarter that ends today.
OIL rose for a third day, trimming its first quarterly loss in a year, after U.S. crude stockpiles fell almost three times as much as forecast. Futures gained as much as 0.6% after the biggest two day rally in seven weeks. The Energy Department said inventories fell 4.38 million barrels, compared with a median analyst projection for a 1.5 million barrel drop.
RICE supply in China, the world’s biggest grower and consumer, may decline after drought and floods damaged crops, potentially boosting inflation and increasing imports. Lower production may bolster rice futures in China that jumped 29% in the past year and increase imports that doubled in the first five months.
GOLD gained for a second day yesterday as a drop to a five week low spurred some investors to buy the metal as an alternative to currencies. Gold futures for August delivery rose 0.7% whilst silver for September delivery rose 3.3%.