In European trade, markets extended their gains on optimism that eurozone authorities and the IMF would successfully complete a Greek deal that would ensure the avoidance of a messy default. It also advanced on hopes that China's lowering of the RRR by 50 basis points on Saturday would ensure a soft landing for its economy. US markets were closed on Monday for the Presidents’ Day holiday.

Among the major averages, the FTSE put on 07% to close at 5945. The CAC was 1% higher at 3473 and the DAX jumped 1.5% to finish at 6948.

With US markets closed there aren’t many leads for investors to work off. As it stands, markets are in a holding pattern as investors wait to hear the outcome from the eurogroup finance ministers’ meeting. It kicked off at 1am Sydney time, and is still in progress at the time of writing. Although a deal is widely expected, what will be interesting will be the comments accompanying the deal. We will write more on this in the afternoon report. For now, we wait to see if there will be a ‘buy the rumour, sell the fact’ reaction to the outcome. The bulls will be hoping for a definitive arrangement which prevents a Greece style situation in the future.

Commodities advanced, due in part to hopes the latest phase of the Greek drama will be resolved and in great part to the move by China to lower the RRR by 50 basis points. In the absence of a curve ball from the meeting, this should be supportive of the resource stocks today. Reporting today we have Flight Centre, Monadelphous, Oil Search, OneSteel and REA Group. MND reported this morning, with its net profit coming in within guidance. FLT has increased its FY guidance range, a move which will likely be cheered by investors.

Ahead of the open, we are calling the Aussie market flat at 4256. On the economic calendar, we have monetary policy meeting minutes at 11.30am (AEDST), followed by some comments from RBA Gov. Mr Stevens at 1.30pm (AEDST). Investors will be looking for any indication of what might happen with rates going forward after this month’s surprise decision. The market has already started pricing out a rate cut for next month, with only a 30% chance of one now.

Market Price at 8:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0755 -0.0015 -0.14%
ASX (cash) 4255 -1 -0.02%
US DOW (cash) 13024 7 0.05%
US S&P (cash) 1368.0 -1 -0.07%
UK FTSE (cash) 5945 -10 -0.17%
German DAX (cash) 6945 20 0.29%
Japan 225 (cash) 9497 12 0.13%
Rio Tinto Plc (London) 37.06 0.84 2.32%
BHP Billiton Plc (London) 20.78 0.55 2.72%
BHP Billiton Ltd. ADR (US) (AUD) closed - -
US Light Crude Oil (Apr) 105.26 -0.09 -0.09%
Gold (spot) 1735.0 0.0 0.00%
Aluminium (London) 2179.00 15 0.69%
Copper (London) 8236.00 61 0.75%
Nickel (London) 19755.00 130 0.66%
Zinc (London) 1982.00 37 1.90%
RBA Cash Rate to be decreased by 25bp (Mar) (%) 32.00 0 0.00%

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

Gordon Campbell: On the Budget’s Spreadsheet Victories

It wasn’t as if expectations were sky high, exactly. Chances are, it was always more likely that we’d be seeing Bigfoot rampage through the Beehive lock-up than catch a glimpse of a credible growth agenda from this government. More >>

Sludge Budget Report - Short The Dollar! MEMO: To international bankers FROM: C.D. Sludge Please short the dollar! It'll be good for both you and us. And you know you want to. Greexit, Eurogeddon... watch out... flight to quality and all that. Follow your instincts. The NZ Debt Management Office has been so surprised at the unprecedentedly low interest rates that it can borrow at that it has already entirely pre-funded the 2013 fiscal deficit - all $8 billion of it! More >>

Pattrick Smellie Comment: Doddling along the best we can hope forCriticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity. Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale. More >>