World Markets Decline Accelerate on Greek, Euro Turmoil

Bikram Pandey
08 May, 2012
New York City

World markets accelerated the decline after Greek political wrangling reignited fears in the euro zone and the euro edged lower for the seventh day in a row. Indexes in New York and in Europe fell and the Greek benchmark dropped to two decade low.

[R]4:10 PM New York – World markets accelerated the decline after Greek political wrangling reignited fears in the euro zone and the euro edged lower for the seventh day in a row. Indexes in New York and in Europe fell and the Greek benchmark dropped to two decade low.[/R]

U.S. indexes edged lower as Greece struggles form the next government and avoid a default before next bailout disbursement and the Left Coalition party that won the second highest number of seats in the election is looking to revoke aid pledges.

The Greek turmoil finally began to weigh on trading in New York and broader indexes lost at least 1.4%. Investors are facing the rising prospects another election in June and the eventual exit of Greece from the euro zone and the European Union.

The euro decreased for the seventh session in a row and gold, silver and crude oil eased in New York and London trading. The benchmark index in Athens plunged 3.6% and closed down near the low since November 1992.

Two rival Greek parties, Pasok and New Democracy won 149 seats in the weekend election, two short for the clear majority in the 300-seat parliament. Syriza party leader Alexiz Tspiras is now charged with forming a new government that aims to nationalize banks, hold debt payments and abrogate bailout measures and labor reforms and pension cuts.

Electronic Arts net income soared and Direct TV quarterly net gained 9%. However, OfficeMax net was cut by more than half.

DirecTV first quarter net increased 8% to $731 million on little subscriber growth and Discovery Communications net declined 28% to $221 million. Electronic Arts fourth quarter net surged 165% to $400 million. Fossil first quarter net rose 4.2% and raise fiscal revenue outlook.

The European indexes slumped as the Greece political deadlock continued. Greece sold €1.3 billion of 6-month T-bills at higher yields. Adecco and Deutsche Post gained after better than expected earnings. Mexico based American Movil agreed to lift its stake in the Dutch telecom network operator KPN NV.

Hungarian output rebounded, Danish surplus declined and Norwegian manufacturing production fell in March. Swedish central government payments surplus in April jumped more than twofold.

The UK indexes dipped after home prices declined and Irish sentiment improved for the fourth straight month in April. The UK manufacturers estimate exports to soar this year. HSBC quarterly net fell 38%. Thomas Cook agreed to new lending terms.

Stocks in Tokyo rebounded on bargain hunting and commodities closed higher. Trading houses led the gainers after Mitsubishi Corp reiterated its full year earnings and lifted earnings outlook. Fuji Heavy Industries gained after it estimated 22% increase in sales in the current year.

Australian budget estimated cash surplus of 0.2% of GDP in the fiscal 2013 as the government attempts to spread the benefits of mining boom to low and middle income families. The budget is expected to return to small surplus of $1.5 billion after four years of deficit.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond fell to 1.84% and 30-year U.S. bond decreased at 3.03%.

The U.S. dollar edged lower to $1.302 to one euro and inched lower against the Japanese yen to 79.81 yen.

Immediate delivery futures of Texas crude oil decreased $1.36 to $98.08 a barrel and Brent crude futures fell $1.17 to $111.92.

In New York trading, futures of natural gas decreased 0.02 cents to $2.30 per mbtu and gasoline price fell 0.43 cents to 296.95 cents a gallon.

In metals trading, copper rose 9.4 cents to $3.67 per pound, gold fell $34.90 to $1,604.20 per ounce and silver decreased 69 cent to $29.37.