Greek Debt Downgrade Sparks Global Decline

123jump.com Staff
27 Apr, 2010
New York City

Stocks in New York and Europe closed sharply lower as talks of Greek default intensify. Greek bond yields surged to 19% and yields on Portugal and Spanish bonds increased as well. Rating agency S&P also lowered Greek bonds to junk and lowered debt rating of Portugal. Commodities fell.

[R]4:00 PM New York – Stocks in New York and Europe closed sharply lower as talks of Greek default intensify. Greek bond yields surged to 19% and yields on Portugal and Spanish bonds increased as well. Rating agency S&P also lowered Greek bonds to junk and lowered debt rating of Portugal. Commodities fell.[/R]

U.S. stocks traded lower as investors fear Portugal, Spain and Ireland may struggle to repay sovereign debts. Greek 2-year bond yields soared to 19% and Athens benchmark index plunged 6% on the rising default probabilities.

S&P lowered Greek bond ratings by three levels to junk and Portugal debt by two notches to A-. The debt downgrade dragged market indexes in New York trading. Investors were also unnerved by the testy exchange between U.S. Senators and Goldman Sachs executives regarding the mortgage business practices at the most profitable brokerage firm.

Deutsche Bank Profits Soared 48%. Daimler AG swung to a quarterly net profit on sales rise of 13%.

UK stocks closed lower tracking weakness in the euro zone markets. Weak metals and commodities also dragged the sentiment. Lloyds Banking Group estimated 2010 net income. BP Plc first quarter revenues surged 55% and net more than doubled. Imperial Tobacco Group PLC lifts dividend 16%.

Better than expected earnings contributed to positive sentiment in Tokyo trading. Sharp Corp and Mazda Motor Corp lifted annual outlooks. Nippon Yusen, Mitsui OSK and Kawasaki Kaisen estimated higher profits on improved freight rates.

Market indexes declined in Shanghai and Hong Kong fell on the worries that China will tighten lending and oversight of property developers. Banks declined in Shanghai. China Vanke declined after the developer said earnings dropped 53%.

India inflation worries took the air from the market rally. Comments from RBI Governor Rao reignited fears that interest rates will rise faster than expected. Punjab and Sind Bank plans to list the bank in a public offering. India may sell a stake in Indian Oil Corporation.

Australian dollar traded lower after investors fear debt worries of Greece may spread to Portugal, Spain and Ireland. Producer prices in three months to March increased 1% but declined 0.1% from the quarter a year ago.

North American Markets

Dow Jones Industrial Average dropped 213.04 or 1.90% to close at 10,991.99, S&P 500 Index edged lower 28.34 or 2.4% to 1,183.71 and Nasdaq Composite Index fell 51.48 or 2.1% to close at 2,471.47. Toronto TSX Composite Index declined 134.23 or 1.1% to 12,146.74.

Latin American Markets Indexes

Mexico Bolsa Index dropped 1,092.19 or 3.3% to 32,679.36 and Brazil Bovespa Stock Index plunged 2,360.84 or 3.4% to 66,511.10.

Europe Markets Review

In London FTSE 100 Index closed lower 74.47 or 1.29% to 5,679.38, in Paris CAC 40 Index decreased 82.17 or 2.06% to close at 3,915.22, in Frankfurt DAX index lower 58.53 or 0.92% to close at 6,273.57. In Zurich trading SMI decreased 70.90 or 1.04% to close at 6,732.84.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 46.87 or 0.42% to 11,212.66, Hang Seng index in Hong Kong decreased 325.27 or 1.51% to 21,261.79 and CSI 300 index in China lower 63.59or 2.00% to 3,108.41. ASX 200 index in Australia decreased 1.50 or 0.03% to 4,880.00. The FTSE Bursa KL Composite index in Malaysia closed lower 0.35 or 0.03% to 1,339.72.

The Kospi Index in South Korea decreased 2.65 or 0.15% to close at 1,749.55. SET index in Thailand closed lower 2.34 or 0.31% to 762.00 and JSE Index in Indonesia decreased 5.41 or 0.18% to 2,939.30. The Sensex index in India decreased 54.66 or 0.31% to 17,690.62.

Commodities, Metals, and Currencies

Crude oil decreased $2.13 to $82.07 a barrel for a front month contract, natural gas edged down 3 cents to $4.24 per mBtu and gasoline decreased 1.99 cents to 232.10 cents.

Soybean future closed down 16.00 cent to $9.93 a bushel. Wheat futures increased 2.50 cents in Chicago trading to $4.90 a bushel. Sugar closed down 0.48 cents at 15.37 cents per pound.

Gold increased $13.80 in New York trading to close at $1,167.80 per ounce, silver closed down $0.15 to $18.22 per ounce and copper for the front month delivery decreased 15.70 cents to $3.39 per pound.

Dollar edged higher against euro to $1.317 and decreased against the Japanese yen to 93.06.

Yield on 10-year U.S. bonds decreased to 3.67% and with 30-year maturities declined to 4.56%.