Global Markets Green On Greece

Apparently Greece was able to successfully pull off the largest sovereign debt restructuring event in financial history today as somewhere between 85-95% of its bond holders accepted “haircuts” of up to 75% on their holdings.

Stock and ETF indexes around the world jumped and the Euro dollar strengthened on the possibility that the crisis might finally be put to rest.

However, as comforting as that prospect might sound, it’s almost an impossible dream as behind Greece lies Portugal, Ireland and Spain and their seemingly insurmountable debt problems.

The news was mostly positive across the board as oil and energy ETFs rose on the strength of better sentiment, hopes for a Greek crisis resolution and ongoing sanctions against Iran.

West Texas Intermediate Crude Oil rose 0.56% to $106.72 while the spot price of gasoline rose 0.5% to $3.31.

Brent crude oil rose 1.06% to $125.44 pm Greece hopes and the continued improvements seen in the U.S. economy.

Nationwide, gas prices are averaging $3.75 gallon.

Gold and silver ETFs and underlying commodities were on the march today as gold rose to $1699 and silver gained 1.3% to $33.87.

Hedge funds and and metals traders remain bullish on the metals complex and technically, gold and silver ETFs are repairing damage done during last week’s sell off.  Gold is above both its 50 and 200 day moving averages while silver has reclaimed its 50 day average.

Holdings in gold ETFs have also risen this week as they have done every week for nearly two months and SPDR Gold Trust (NYSEARCA:GLD) holds 1, 294 metric tons of gold valued at US$ 70,258,617,300.28 according to the ETFs web site.

It looks like Greek received enough support for its bond swap today to qualify for the next round of bailout money from the European community.

Estimates of the total “uptake” on the deal vary from 85-95% and the official results will be announced at 0100 New York time on Friday morning.

The only question that seems to remain is if the entire swap closed with enough participants to avoid the collective action clauses which would then likely lead to activation of the credit default swaps and a Greek default.

However, in an exclusive story, Reuters reports tonight that a group of hedge funds think they have found a loophole that would force Greece to repay  some of the bonds at full value.
In the United States, major indexes rose on the day’s news, led by the Russell 2000 Index of small cap stocks, (NYSEARCA:IWM) that is typically a market leader in both directions as equities rise and fall.

ETF Summary:

CurrencyShares Euro Trust: (NYSEARCA:FXE) +0.89%

SPDR S&P 500 ETF Trust (NYSEARCA:SPY) +0.98%

iShares MSCI Germany Index (NYSEARCA:EWG) +3.67%

iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) +2.1%

iShares Russell 2000 Index ETF (NYSEARCA:IWM) +1.28%

Bottom line: Global equity markets turned green today on hopes for a resolution to the Greek crisis, but we can expect this drama in Europe to continue for many months to come.