Wednesday, 25 February 2015

Stocks rise on Yellen comments, Greek deal

Stocks rose on Tuesday.

In the US, the S&P 500 rose 0.3 percent to a new record high after Federal Reserve Chair Janet Yellen indicated in testimony before the Senate Banking Committee that an increase in interest rates is unlikely before mid-year as inflation and wage growth remain too low.

In Europe, the STOXX Europe 600 rose 0.6 percent to a seven-year high. Greece’s ASE Index in particular surged 9.8 percent after eurozone leaders approved a bailout extension for four more months.

The hard part for Greece is still to come though.

“The conditional agreement to extend the current program is just the first hurdle in a long race,” Maria Paola Toschi, global market strategist at JPMorgan Asset Management, wrote in a note to clients on Tuesday. “We expect the negotiation process to continue to blow hot and cold.”

Indeed, in a letter to Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, IMF Managing Director Christine Lagarde expressed doubts about Greece’s reform plan, saying that it is “not very specific” and does not convey “clear assurances” that key reforms will be implemented.

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