With news that European Union leaders have agreed to a debt deal, world investment markets have rallied. The Greece debt crisis, which has presented an ongoing struggle for Europe for many months, may soon come to an end and investors in the World Market, including the U.S., are showing their excitement.
Europe Establishes Debt Deal, Takes Losses on Greek Bonds
Spectators both in and out of Europe have been anxiously standing by, hoping that European Union leaders could find a way to fix the debt dilemma in Greece. Overnight, their dreams may have come true as leaders are said to have secured a blockbuster package in an attempt to reduce the country’s debt.
The deal requires Eurozone countries and the International Monetary Fund to provide an additional 100 billion euro (140 billion in U.S. currency) in rescue loans as a second bailout package for Greece. Banks will also be required to take 50 percent losses on Greek bonds.
Greece’s troubled 230 billion euro ($320 billion) economy is in danger of heading into a fourth year recession. Unemployment is sitting at 16.5 percent and taxpayers are struggling to cope with new taxes placed on property, purchases and their shrinking incomes.
Shortly after the night-long negotiations, Socialist Prime Minister George Papandreou stated at a news conference in Brussels, “We have avoided mortal national danger.” He went on to say, “A burden from the past has gone, so that we can start a new era of development, on our own steam.”
U.S. and World Market Rally after Debt Deal News
It’s no secret that issues of European debt directly impact the rest of the world, including the United States. As of March 2010, nine out of 10 corporate issuers of debt held by prime money market funds alone were big European firms.
News that a debt deal was reached to aid Greece sent stocks around the world soaring. Here’s a peak at the debt deal package’s impact:
- Britain’s FTSE 100 climbed 3 percent
- Germany’s DAX rallied 5 percent
- France’s CAC 40 jumped 5.5 percent
- Shanghai Composite moved up slightly 0.3 percent
- Hong Kong’s Hang Seng jumped 3.3 percent
- Japan’s Nikkei rose 2 percent
In the United States, the Dow gained 260 points (2.2 percent) at the open, while the S&P 500 jumped 31 points (2.5 percent) and the Nasdaq composite surged 68 points (2.6 percent).
