European stock markets surge on renewed optimism over the Greek debt crisis.
Equities in Europe took a positive turn after new developments in the ongoing Greek debt crisis on Monday 22nd June. Hopes for a coming deal between the heavily indebted nation and its European creditors soared on news that Greece had submitted a new reform proposal that sought a compromise on key issues.
Stock markets rose once the news broke, with the main Greek ATG index spiking some eight per cent higher at one point. Meanwhile, Germany’s DAX, the French CAC 40 and the Euro Stoxx 50 were all more than three per cent higher by midday, although the afternoon session saw them consolidate their gains.
European officials sought to bring a semblance of calm to stocks by downplaying the chances of a forthcoming deal on Monday, with German chancellor Angela Merkel saying: “There are still a lot of days in which decisions can be taken.”
Pension reforms for Greece?
Despite this, markets were energised by rumours that Greece had included fresh pension reforms in its new proposal, a previous key sticking point. Ahead of Monday’s Eurogroup meeting, optimism was soaring to dizzying heights.
However, the Eurogroup meeting once again ended without a deal for Greece, but at least the outlook was decidedly more positive than the insult-laden conclusions to negotiations that had been seen in recent weeks.
In the press conference following the meeting, Eurogroup president Jeroen Dijsselbloem said that the initial assessment of the Greek proposals found that they are “broadly comprehensive”. But they need to check whether they are comprehensive enough, indicating that they are a basis from which talks can be restarted.
Mr Dijsselbloem confirmed rumours that two proposals had been sent overnight, which may have added to confusion between finance ministers today. However, he noted that they were both quite similar, meaning less problems were caused as a result. “We’d have liked them earlier though,” he added.
“This is a solid basis, but work still needs to be done,” added European commissioner Pierre Moscovici. “We are currently looking for an agreement but we haven’t reached one yet.”
EU leaders set to make final decision
It seems that the general consensus is positive over the new proposals from Greece. However, they were sent a little too late for any breakthrough to be made today. Attention now turns toward the summit of the leaders of the European Union on Thursday, where we may finally see a line drawn underneath the ongoing Greek debt saga.
“After a month of interminable claims and counterclaims from each side, there is a bit of excitement on the markets and the genuine semblance of optimism,” explained Connor Campbell, financial analyst at SpreadEX.
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