Greek Crisis, EU Summit Sway Global and U.S. Markets

Bikram Pandey
30 Jan, 2012
New York City

Stocks in New York traded lower as European leaders gather in Brussels one more time to devise plans to contain debt crisis. Banks and resources in New York and Europe declined. Exxon sold its majority stake in a Japan based refinery. U.S. Treasury bonds yields fell near record low levels.

[R]4:00 PM New York – Stocks in New York traded lower as European leaders gather in Brussels one more time to devise plans to contain debt crisis. Banks and resources in New York and Europe declined. Exxon sold its majority stake in a Japan based refinery. U.S. Treasury bonds yields fell near record low levels.[/R]

The U.S. indexes fell as leaders in Europe gather to discuss the debt crisis for the seventeenth time in two years and tensions remained high.

Banks in New York traded lower on the growing worries that a disorderly Greek debt default may cause another round of losses. Banks have been less than transparent and consistent in reporting their exposure to peripheral European nations and the Securities and Exchange Commission is finally urging the largest of five banks to declare in details the exposure.

However, Greek leaders appear to be deadlocked in negotiations with international lenders to restructure debt losses of at least 50% and Greek finance minister rejected the calls to monitor future budgets by the European commissioner.

Greece is likely to settle its differences with lenders probably as early as this week as the European Union summit began in Brussels. But the time is running short and Greece needs the next tranche of bailout as early as next month to pay for its next instalment of loans in early March.

In corporate news, Exxon decided to sell its stake in a Japanese refinery for $3.9 billion. Switzerland-based ABB agreed to buy Thomas & Betts for around $3.9 billion and Pep Boys agreed to be acquired by Gores Group for $1 billion.

Gannett Co., fourth quarter net slumped 33% to $116.9 million as its publishing division battles revenue decline of 5.3% with the falling circulation. Wendy’s Co. declined after it reported less than expected operating earnings. Nabor Industries, the largest U.S. based land drilling contractor gained after its 81-year old chief executive resigned.

European markets edged lower ahead of the EU leaders meeting in Brussels today and Italy auctioned €7.5 billion in long-term debt today at lower yields. German wholesale sales eased and the Spanish economy contracted in the fourth quarter. Euro area economic confidence improved but Italian business confidence declined in January.

The UK indexes declined as banks and miners fell today and home prices were flat in January. Centrica agreed to acquire non-operated interests in the Statfjord energy field for £142 million.

Stocks in Tokyo edged lower and the yen strengthened ahead of the EU summit. Exxon agreed to sell its stake in the crude oil refinery TonenGeneral Sekiyu KK for nearly $3.9 billion. Advantest surged on profit forecast and Nippon Electric Glass declined on a sharp drop in earnings.

Australian stocks and indexes edged lower on the worries that four largest banks may face another ratings downgrade and retailers ease as the dollar strengthened. Transurban’s chief executive resigned.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.83% and 30-year bond closed down at 2.97%.

The U.S. dollar traded up 0.7% to $1.31 to one euro and traded lower against the Japanese yen to 76.28.

Immediate delivery futures of Texas crude oil fell 79 cents to $98.77 a barrel and futures of natural gas declined 3 cents to $2.72 per mbtu and gasoline price decreased 6.5 cents to 286.15 cents a gallon.

In metals trading, copper decreased 5.9 cents to $3.83 per pound, gold decreased $2.30 to $1,733.10 per ounce and silver decreased 49 cents to $33.30.