For most of the week, markets received a boost leading up to the negotiations on Thursday about a deal for Greece. A deal was struck on Thursday, which involved giving Greece a second bailout of $109 billion euros. The duration of rescue loans to Greece were extended from 7.5 years to 15-30 years. Meanwhile, the interest rate was reduced from 4.5% to 3.5%. Markets shrugged off Fitch's statement that Greece would be in temporary default as a result of the deal.
Strong earnings season
The earnings season has been strong, with AMD and MacDonald's being the latest companies that have posted better-than-expected earnings.
China's PMI falls below 50
A China PMI recorded by HSBC showed on Thursday that China's July PMI fell below 50, which indicated a contraction. It was also the lowest level in 28 months, since March 2009.
Looking ahead to next week
Investors will be focused on the continuing debt ceiling negotiations in the US. Despite President Barack Obama having made Friday the deadline for negotiations, Friday passed without a deal between the Democrats and Republicans. If a deal continues to be out of reach, then markets will likely fall next week. In contrast, a deal on the debt ceiling could spark a relief rally, since both the Greek crisis and the US debt ceiling would be resolved.
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