[It] will be crucial for the Greek people, but also for the euro zone and the stability of the world economy
Gold Coast, Australia (PRWEB) July 06, 2011
Last week the Australian sharemarket had its biggest rise in seven months, according to the Dow Jones Newswire (1 July 2011). The reason cited for this, according to the Dow Jones Newswire was the result of end-of-financial-year buying exaggerating a positive reaction to offshore gains following the Greek vote to adopt a harsh austerity plan on 29 June 2011 (Dow Jones Newswire, 1 July 2011).
The Australian Stock Investment Group believes that this vote increased hopes that Greece may be able to avoid a default on its debt, and in turn sent the Australian dollar soaring. This belief is shown in lasts week's figures: the Australian dollar hit its highest against the UK pound since early 1985 (BusinessDay, 30 June 2011). Last week the benchmark S&P/ASX 200 also closed up 78.5 points, or 1.7%, at 4608, after hitting a four-week high of 4609.2. And, industrials, resources, healthcare, utilities and banks also led broad-based gains, according to Dow Jones Newswire (1 July 2011).
A report issued by Aliom Pty Ltd, an Australian Stock Investment Group affiliate broker, showed that last week BHP Billiton gained 1.5% to A$43.80, RIO Tinto Group advanced 1.8% to A$82.99 and Newcrest Mining Ltd rallied 1.6% to A$37.71, amongst others.
European Union President Herman Van Rompuy said the vote’s impact would be felt worldwide and these gains show that he was correct. “[It] will be crucial for the Greek people, but also for the euro zone and the stability of the world economy” he said last week.
This week, the Australian Stock Investment Group’s blog – Market Talk – reflects on the global impact of the Greek debt crisis. According to blog contributor, Niv Dagan, while Australian banks are the strongest and most profitable in the world and have little exposure to Greece, Ralph Norris, CEO of CBA recently noted that the sovereign debt issues in Europe are increasing the wholesale costs of funding. “What we are seeing is banks becoming extremely vulnerable to external pressures and hence it is imperative that these issues get resolved sooner rather than later” says Dagan. (Market Talk: The Sovereign Debt Crisis, 4 July 2011).
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