Stock market mixed reaction on Greece bailout

Published:  22 Feb at 12 PM

As reported by the BBC, financial markets have shown a mixed reaction on the announcement of another bailout package for Greece. New York’s Dow Jones briefly exceeded the 13,000 mark before ending nearly flat, while markets in Frankfurt, London and Paris all dropped slightly.

The euro was changed very little from Monday's ending price. Shares across the EU went up on Monday in hopes of a deal finally being struck, with bank shares performing well. Europe's banking sector has been shored up with help from the European Central Bank.

In the latest rescue deal, Greece is to obtain loans worth over 130 billion euros (£110bn; $170bn). In exchange, it will strive to cut its debts to 120.5% of its Gross Domestic Product by 2020 and agree to an "enhanced and permanent" monitoring of EU officials to supervise economic management.

Greece requires the money to dodge bankruptcy before March 20, when maturing loans are due to be repaid. Louise Cooper, a market analyst at BGC Partners, said that Europe's banks have now been awarded nearly half-a-trillion euros in bailout money, all at 1%. She called this “very cheap money” which has protected the banks from failing. The logic is that banks cannot fail even if Greece goes bust, she added.

However, Cooper said few people in the markets saw the latest bailout as the answer. She said it only delaying the inevitable, as this is the second deal in just two years. She said the first package equalled to nearly 20,000 euros per Greek citizen and even this amount did not solve Greece's problems, adding that the money has probably not been well spent.