Financial markets firmed a tad as the Greek Parliament approved an austerity plan which involves reduction of 325M euro. Wall Street climbed with DJIA and S&P 500 rising +0.57% and +0.95% respectively. In the commodity sector, oil prices soared with the front-month contract for WTI crude oil rising to a 2-week high of 100.91 and the equivalent Brent crude contract gaining +0.53% during the day.
The focus is now on the EU meeting on Wednesday when the Greek deal will be ratified. However, the overhang remains as implementation is always a more complicated issue, especially during a time of rising social tension and unrest. Rating agencies were not yet relaxed with the situation in European countries with Moody's cutting credit ratings of 6 European countries including Spain, Italy and Portugal. Rating of Spain was lowered to A3 from A1, while that for Italy was down to A3 from A2. Portugal's rating was cut to Ba3 from Ba2. The agency warned that it may stripped of the triple A ratings of France and the UK.
In the US, the Obama administration presented his Budget plan for fiscal year 2013. Proposed measures included allowing the expiration of the Bush-era income tax cuts for higher-income earners, a minimum 30% tax on millionaires, US$800B for job creation and infrastructure investment and spending cuts of US$1.2 trillion. The plan, worth of US$3.8 trillion, will likely have the same fate as the one presented last September- not being able to be approved in the Congress.
Apart from the improved sentiment brought about by the approval of the Greek austerity plan, oil was sent higher by intensified tensions over Iran. Israel blamed Iran for the embassy car bombings in India & Georgia. Israeli Prime Minister Benjamin Netanyahu warned that “Israel will act methodically and with determination and steadfastness against international terrorism originating from Iran'. Yet, Iran denied any connection with the attacks. Oil investors worried that Israel will retaliate as the country has been proposing the use of military intervention to halt Iran's nuclear weapon developments.