Euro zone leaders made Greece surrender much of its sovereignty to outside supervision in return for agreeing to talks on a bail-out but making the deal stick will be a major problem, Craigs Investment Partners broker Chris Timms says.
The 89billion ($NZ146.6billion) bail-out will keep the near-bankrupt country in the single currency.
''Just hours after the deal was settled in marathon all-night talks, doubts were already emerging about whether left-wing Prime Minister Alexis Tsipras will be able to hold his government together long enough to implement any bail-out,'' Mr Timms said.
The terms imposed by international lenders, led by Germany in all-night talks at an emergency summit, obliged Mr Tsipras to abandon promises of ending austerity and could fracture his government and cause an outcry in Greece, Mr Timms said.
Greek reform minister George Katrougalos told the BBC the ''Europe of austerity'' had won.
''Either we are going to accept these draconian measures or it is the sudden death of our economy through the continuation of the closure of banks. So it is an agreement that is practically forced upon us.''
Mr Tsipras, elected five months ago to end five years of suffocating austerity, would have to rely on votes from pro-European opposition parties, raising questions over the future of his Government and opening the prospect of snap elections, Mr Timms said.
Left-wing rebels in the ruling Syriza party and his junior coalition partner, the right-wing independent Greeks party, indicated they would not tear up election pledges that brought them to power in January.
Share prices on both sides of the Atlantic rallied on a deal between Greece and its international creditors, staving off the country's exit from the euro zone - at least for now - as it secured a third bail-out.
European stocks finished at a more than two-week high, getting a boost from the prospect of new funding being unlocked for the cash-strapped country.
Both the Dow and the Nasdaq closed above their 50-day moving averages.
Technology stocks leapt, with Microsoft, Intel, Apple, Cisco Systems and IBM all higher. Facebook surged more than 2.4%.
US Treasury bills declined, pushing yields on the 10-year note higher to 2.43%.
''It's great hearing Greece is not going over the deep end,'' Rob Lutts, chief investment officer at Salem, Massachusetts-based Cabot Wealth Management, told Bloomberg.
''What's good for the rest of the world for now is Greece staying as is and instituting these reforms. Last week's volatility was all on the back of what's going on in Greece, as well as in China, and today it's pretty apparent the path is one of resolution.''
The Chicago Board Options Exchange, or VIX as its known, shed 17%.
The United States dollar increased in value while the euro and the Australian and New Zealand dollars fell.
''This is not over yet. In fact, it might be far from over,'' Anthony Lawler, a portfolio manager who invests in hedge funds at investment firm GAM in London, told Reuters.
''It is not at all certain that the Greek Government will accept what is proposed.''
The rest of Europe was not left unscathed. German Chancellor Angela Merkel was seen as having pushed Greece to the edge and having put her own legacy at risk.
This week offers another key event as US Federal Reserve chairwoman Janet Yellen delivers her semi-annual testimony to Congress.
Last week she said she still expected the Fed to lift rates this year.
