The Greek parliament accepted the terms of the bailout amid some of the worst violent protests seen in Greece this year. Greek Prime Minister Alexis Tsipras was left weakened by the vote when a revolt in his leftist Syriza party saw many voting against his program. European finance officials are scheduled to approve 7 billion in bridging funds that would allow Greece to pay its immediate debts, thus avoiding a default on their payment to the European Central Bank on Monday next week. While European stock markets saw gains yesterday, investors are expecting today’s performance to reflect the new advancement in the Greek crisis. The UK’s FTSE 100 added 0.2% as mining operations such as Anglo American (LONDON:AAL) BHP Billiton (LONDON:BLT), Fresnillo (LONDON:FRES), Rio Tinto (LONDON:RIO) and Glencore (LONDON:GLEN) gain 1.4-2.7%. The French CAC 40 added 0.3% as industrial and consumer brands such as Alstom (PARIS:ALSO), Danone, Kering (PARIS:PRTP), LVMH (LONDON:0HAU)and Schneider Electric (PARIS:SCHN) decline up to 2%. The German DAX gained 0.2% as major financials such as Commerzbank (XETRA:CBKG) and Deutsche Bank (XETRA:DBKGn) gain 2.2% and 1.3%, respectively. The Italian FTSE MIB gained 0.8% amid broad gains in the index components.
The US dollar strengthened after Federal Reserve Chair Janet Yellen reinforced her expectation that interest rates would rise before year’s end. In an annual congressional testimony, Yellen reiterated the position that interest rates would hike if the U.S. economy continues to expand as expected. The U.S. dollar gained 0.2% on the euro after the testimony and is trading at $1.0922. The dollar edged up against the yen as well, currently trading at 123.85 after reaching a three-week high of 123.97.
Gold futures reached an eight-month low on Wednesday as pressure from upbeat U.S. economic data and Janet Yellen’s most recent congressional testimony regarding rising interest rates reduce the allure of gold. Higher interest rates leads to a stronger currency, making gold, which is sold in dollars, more expensive for countries that use other currencies. Additionally, yield-bearing assets like bonds and equities become increasingly more attractive.
Eurozone inflation data will be released later today with the consumer price index. The European Central Bank (ECB) will make its interest rate decision later in the day, although no major announcements are expected. U.S. inflation data will be released early on Friday followed by housing data.