The ASX looks to move higher today, the Sept SPI contracts 35 points higher at 5476, following a lead from Wall Street friday that saw the Dow put on 211 points and the S&P500 1.1%.
However markets will react to the overnight NO decision in Europe to a new bailout for Greece, so perhaps a false lead is in place.
Euro zone leaders told near-bankrupt Greece at an emergency summit on Sunday that it must enact key reforms this week to restore trust before they will open talks on any new financial rescue to keep it in the European currency area.
Six sweeping measures including tax and pension reforms will have to be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, a draft decision sent by Eurogroup finance ministers to the leaders showed.
German Chancellor Angela Merkel, whose country is the biggest contributor to euro zone bailouts, said the conditions were not yet right to start negotiations, sounding cautious in deference to mounting opposition at home to more aid for Greece."The most important currency has been lost and that is trust," she told reporters. "That means that we will have tough discussions and there will be no agreement at any price."
Greece meets the conditions, the German parliament would meet on Thursday to mandate Merkel and Finance Minister Wolfgang Schaeuble to open the talks on a new loan. Then Eurogroup finance ministers would meet again on Friday or at the weekend to formally launch the negotiations.
A Greek government official, in a first reaction to the draft, said: "How can they demand all these measures at the last minute without securing a lifeline to see us through till next week?"
A European official said a Eurogroup meeting on Monday could discuss ways to provide emergency finance to keep Athens afloat.
The draft said Greece needed €7 billion by July 20, when it must make a crucial bond redemption to the European Central Bank, and a total of €12 billion by mid-August when another ECB payment falls due.
Also China will be of interest to see if they can sustain last weeks' late rally. The Shanghai stock market rose 4.5 per cent and the Shenzhen stock market rose 4.1 per cent on Friday after heavy buying by the China Securities Futures Corp.
"[China Securities Futures Corp] now has unlimited credit support from the central bank," said Lu Wenjie, a China stock market strategist at UBS.China's strategy closely parallels the steps the Hong Kong government took to reverse a stock market rout in 1998. During that Asian financial crisis, Hong Kong quickly bought $US15 billion of shares in 33 component stocks of the Hang Seng Index. However with half the Shanghai index effectively closed for trading, the task of propping the index has been somewhat easier than it may have been.
The AUD is at 74.22c down .3%
Oil $52.81
Gold $1163 + $3.50
metals largely unchanged
