Equity markets started off the week on a positive note as investors were more than joyful to see Greek leaders accept the proposed austerity measures. Euphoria quickly spread from European markets onto Wall Street as news of the bailout helped to restore confidence in the debt burdened currency bloc, as well as the global economic recovery [see ETF Insider: Is Euro Zone Optimism Here To Stay?]. On the home front, the Nasdaq led the way higher, gaining 0.95% on the day, while the Dow Jones Industrial Average lagged behind, tacking on a gain of 0.57% as the trading session drew to a close.
With no major economic releases on Wall Street to kick-off the week, investors turned to international news. Economic growth prospects for the Asia Pacific region deteriorated a bit after worse-than-expected data. Fourth quarter Japanese GDP came in at -0.6%, a rather significant drop-off versus the previous reading of 1.7%. Amidst the Greek debt-deal euphoria, gold prices dipped as investors increased their appetite for risk; futures prices for the precious yellow metal settled near $1,725 an ounce as the closing bell rang [see GLD-Free Gold Bug ETFdb Portfolio].
The iShares MSCI Brazil Index Fund (EWZ) was one of the best performers, gaining 2.05% on the day, bolstered by widespread optimism across financial markets world-wide. Investors’ risk appetite increased on Monday thanks to encouraging developments in the Euro zone, which effectively pushed “riskier” asset classes higher, including emerging market stocks. Brazilian equities climbed higher as investors opted for lucrative capital gains opportunities; EWZ is up nearly 20% year-to-date [see also BRIC-Or-Bust ETFdb Portfolio].
The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, losing a dismal 7.57% on the day. Uncertainty evaporated from the markets as Greek policymakers approved the strict austerity measures imposed by the EU and IMF. Although the news was welcomed by financial markets, many experts are worried that the debt-deal will only add to the ongoing civil unrest and political tensions in the nation.
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Disclosure: No positions at time of writing.
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