It’s the dra-chma that just won’t end, but investors are still hopeful of a happy ending. As Eurozone and Greek officials made positive noises about the possibility of a deal to avert a debt default and potential Grexit, markets veritably jumped for probably premature joy.
Athens’ stock exchange rose as much as 8% this morning, having tumbled almost 43% in the last year. Shares in Greece’s embattled banks leapt up to 20% higher as the European Central Bank extended its Emergency Liquidity Assistance to them by another €1.3bn (£0.9bn) to €87.2bn, the third increase in less than a week.
The sudden optimism was sparked by European Commission president Jean-Claude Juncker’s chief of staff tweeting the latest Greek proposal, which reportedly included raising the retirement age in a bid to head off demands to cut state pensions further, was a ‘good basis for progress’. Other officials told various media outlets off the record they were optimistic the €7.2bn Greece needs from the ECB, European Commission and IMF would be unlocked, so they can repay €1.6bn due to the IMF in eight day’s time.
But Eurogroup finance ministers pretty much called a halt to the stock market party as they arrived in Brussels today. The Austrian finance minister Hans Jorg Schelling told journalists waiting in the rain they should expect another meeting this week and that the Greeks could have been more professional (apparently some fat finger accidentally sent the wrong documents over this morning).
Maltese wordsmith Edward Scicluna said, ‘the story does not end here.’ And the finance minister of Finland, the Eurozone’s hawk, was equally pessimistic.
#Eurogroup about to begin. Do not expect a breakthrough.— Alexander Stubb (@alexstubb) June 22, 2015
Any deal would only prolong the play – the IMF repayment is a sliver of Greece’s €320bn debt mountain and there’s unlikely to be any progress on Tsipras and his Syriza party’s demands to write a chunk of that off. The Eurozone will probably pull off a one minute to midnight deal before next Tuesday – no one really seems to want a Grexit, although it is still possible that will be the climax of this saga. But maybe we’ll at least get an interval next week.