World Markets Slump on New Greek Worries

Bikram Pandey
10 Feb, 2012
New York City

World markets slide after Greek turmoil put investors on edge. Market indexes in Europe and in New York dropped 1% or more and commodities declined. The U.S. trade deficit surged on rising imports from China and growing purchase of crude oil.

[R]5:30 PM New York – World markets slide after Greek turmoil put investors on edge. Market indexes in Europe and in New York dropped 1% or more and commodities declined. The U.S. trade deficit surged on rising imports from China and growing purchase of crude oil.[/R]

U.S indexes dropped 1% as investors were on the defensive as Greek debt talks reach next hurdle. For the week, the S&P 500 and Nasdaq declined a fraction as sentiment swung with developments in Greece.

Tensions rose after deputy foreign minister of Greece resigned and violence broke out during Athens demonstrations and riot police detained protesters.

Greek Prime Minister Lucas Papademos in a televised speech asked ministers in his coalition government to resign if they are not prepared to back the austerity deal. He added, “Any other option would be catastrophic.”

Greek politicians are expected to initiate long and tortuous negotiations before parliamentary vote either tomorrow or Monday where the ruling governing coalition has a thin majority. But the outcome is uncertain and politicians are weary of taking hard line position ahead of election as early as April.

Separately, a credit analysis firm Standard & Poor’s lowered its views on 34 Italian banks after it lowered its credit opinion on Italy on January 13.

The latest action today included downgrade of the largest Italian bank UniCredit SpA, Intesa Saopaolo SpA and Banca Monte dei Paschi di Siena SpA and placed them on the negative outlook.

Crude oil halted 3-day rally and commodities declined on the economic worries. LinkedIn jumped 9% after net income soared 30%.

The U.S. trade deficit in December surged to $48.8 billion as imports rose and deficit with China accelerated. The deficit increased from the revised $47.1 billion in November.

For the year 2011, trade deficit increased 11.6% to $558 billion, record high since 2008 according to the data released by the Commerce Department.

In earnings news, Alliant Energy fourth quarter net increased to $57 million. Brookfield Office fourth quarter net slumped to $338 million and PPL Corp. fourth quarter net increased to $401 million. Telus Corp. fourth quarter net increased 5% to $237 million.

European markets traded lower after the euro zone finance ministers set more conditions for Greece before releasing the next bailout funds. Saab declined 9% after quarterly orders were below expectations. Barclays accelerated plans to cut expenses and trim bonuses.

Stocks in Japan declined and market averages edged lower as corporations reported mixed earnings. Softbank surged on the prospects of China based Alibaba.com going private. Freight shipping companies gained on the price hike for container shipments.

Australian stocks edged lower for the second day following weak results from BHP Billiton and Rio Tinto. Ongoing turmoil in Greece also weighed on investor sentiment. ANZ and Westpac raised interest rates on mortgage lending.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.94% and 30-year bond inched lower to 3.12%.

The U.S. dollar traded up 0.9% to $1.318 to one euro and edged up against the Japanese yen at 77.58.

Immediate delivery futures of Texas crude oil fell $1.14 to $98.70 a barrel and futures of natural gas fell 0.2 cents to $2.47 per mbtu and gasoline price decreased 3.75 cents to 297.3 cents a gallon.

In metals trading, copper decreased 11.90 cents to $3.86 per pound, gold decreased $22.10 to $1,719.10 per ounce and silver fell 43 cents to $33.48.