Greece: Back from the Precipice for Now

European stocks and bonds have bounced on hearing the news of the Greek bailout deal from Brussels but this will be shortlived warns Morningstar's Andy Brunner

Andy Brunner 14 July, 2015 | 2:42PM

This article is part of the Morningstar's Guide to Emerging Market Investing. Click here to find out just what an emerging market is and which regions hold the potential to boost your investment portfolio. 

The news of the bailout deal from Brussels yesterday was initially relayed with headlines such as "European Summit Strikes Bailout Deal to Keep Greece in Euro”. Unsurprisingly, financial markets took the news well, with European equity indices bouncing some 2% in early trading and holding onto the bulk of those gains by the close. The Euro Stoxx 50, which fell heavily during the week of the referendum “No” vote, has jumped 9% from the lows and is now close to its best levels in several months.

Similarly, EU peripheral bonds reacted positively to the news, with the Spanish 10-year yield closing at 2.11% compared to a recent spike of 2.60%, and the spread over 10-year German bunds fell back to 125bp. The euro, having initially rallied against the US dollar to 1.12, eased to 1.103 by the close.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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