S&P 500 and European Markets Ease as Greek Negotiations Collapse

Nichole Harper
15 Jun, 2015
New York City

Market indexes around the world were under pressure and the euro declined after talks between European lenders and Greece collapsed. Bond yields on 2-year Greek jumped to 29% and 10-year bond yield jumped to 12.4%. The euro fell 0.2%.

[R]1:30 PM – Market indexes around the world were under pressure and the euro declined after talks between European lenders and Greece collapsed. Bond yields on 2-year Greek jumped to 29% and 10-year bond yield jumped to 12.4%. The euro fell 0.2%.[/R]

Market indexes around the euro zone and on Wall Street opened sharply lower after talks between European lenders and Greek negotiators collapsed.

Officials at the European Central Bank and finance ministries dismissed the latest Greek proposal as “vague and repetitive,” just days after the International Monetary Fund recalled its negotiating team from Brussels.

Industrial production in May fell 0.2% from March, manufacturing production fell 0.2% and mining slid 0.3%. Utility output rose 0.2%, the Federal Reserve Bank said.

On Wall Street, Tollbooth Strategy Index decreased 0.5% or 57.93 to 10,685.45.

S&P 500 index fell 0.4% or 7.67 to 2,086.43 and the Nasdaq Composite Index fell 0.5% or 23.69 to 5,027.45.

Crude oil in New York slipped 36 cents to $59.60 a barrel and gold jumped $9.20 to $1,188.40 an ounce.

U.S. Movers

CVS Health Corp gained 81 cents to $103.04 after the drugstore chain agreed to acquire the in-store pharmacies and clinics business of discount-store operator Target, Inc for about $1.9 billion to expanding its presence in new markets like Seattle, Denver, Portland and Salt Lake City.

Standard Pacific Corporation ((SPF)) soared 6.9% or 58 cents to $8.94 after the home builder and Ryland Group Inc. agreed to combine in a merger to form a company with a market capitalization of about $5.2 billion and enterprise value of about $8.2 billion.

The combined company will control about 74,000 home-sites and joint revenues of $5.1 billion.

The transaction is expected to close in early fall of this year.

Shares of Ryland Group Inc climbed 5.8% to $45.32.

United Technologies Corporation ((UTX)) dropped 2.1% or $2.46 to $115.17 after the aerospace products maker plans to either sell or spin off its $8 billion Sikorsky Aircraft unit, the maker of the Black Hawk helicopters for the U.S. military.

The final decision is expected by the end of the third-quarter.

The company forecasted revenues for the year between $58 billion and $59 billion and earnings per share in the range of $6.35 to $6.55.

European Markets

In the first estimate, the euro zone trade surplus with the rest of the world soared to €24.9 billion in April from €14.9 billion a year ago month.

In EU28 region, the trade surplus surged to €12.2 billion in April with rest of the world from €0.8 billion in a year ago month, the Statistical Office of the European Communities said.

In London trading, FTSE 100 index slumped 0.9% or 59.82 to 6,727.43 and in Frankfurt the DAX index declined 1.8% or 201.47 to 10,994.22.

In Paris, CAC 40 index dropped 1.7% or 84.52 to 4,820.67.

Dragon Oil Plc surged 8.4% to 726.50 pence after the United Arab Emirates-based oil and gas explorer said Dubai-based Emirates National Oil Co increased its takeover offer of £7.50 a share in cash for remaining stake in the company.

This represents a premium of about 47.2% to the closing price of £5.09 per Dragon Oil share as on March 13.

The offer valued the company at £3.7 billion or €5.1 billion or $5.75 billion.

Deutsche Annington Immobilien SE declined 5.9% to €26.12 after the Germany-based residential properties developer agreed to acquire domestic rival Suedewo for €1.9 billion or $2.13 billion.

The company plans to conduct a capital increase with subscription rights from authorized capital of €2.25 billion for acquisition.

The deal is expected to close in the next month.

Metro AG declined 5% to €29.45 Germany-based department store operator agreed to sell its department store chain Galeria Kaufhof GmbH to Canada-based Hudson''s Bay Co. in a deal valued at €2.83 billion or $3.16 billion including debt and to expand beyond North America and to introduce Saks-brand in Europe.

The retailer said the deal will significantly reduce the net debt by about €2.7 billion and cash inflow of about €1.6 billion.

The transaction is expected to be closed by end of September 2015.

Asian Markets

Nikkei average closed down and the yen traded weak in listless trading. Honda Motor announced a charge to cover recall of airbags. Toshiba identified more accounting irregularities.

Stocks in Tokyo closed down and the yen hovered near its recent low as Honda and Toshiba announced earnings adjustments.

The Nikkei 225 Stock Average fell 19.29 to 20,387.79 and the broader Topix index edged up 0.44 to 1,651.92.

The yen closed at 123.51 against a dollar.

Honda Motor Co Ltd slipped 1.4% to 4,075 yen after the auto maker said that it would restate its financial results by an additional $363 million in spending due to charges related to a U.S. recall of vehicles with the faulty Takata supplied airbags.

The automaker said revised earnings will be released by the end of this month and are not expected to affect the dividend or forecast for the current fiscal year.

Separately, the company said it will launch its most expensive motorcycle priced at 21.9 million yen in mid-July.

Toshiba Corporation closed unchanged at 444.70 yen after the diversified company identified 15 new cases of inappropriate accounting issues and said that the electronics group will have to revise past operating profits by 3.6 billion yen.

The latest findings from internal investigation brought the number of accounting irregularities to 24 and the size of its operating profit corrections to 54.8 billion yen, the conglomerate said on Friday.

The number of accounting irregularities by a third-party panel detected 12 cases of suspected accounts between fiscal 2009 and fiscal 2013.

Due to the accounting irregularities, Toshiba delayed its earnings release.

Stocks in Mumbai traded higher after factory output increased more than expected in April, a two-month high.

In addition, wholesale prices declined in May, after soaring for most of last year. India is facing worst drought conditions since 2009.

The Wholesale price Index in May decreased at annual rate of 2.36% compared to 2.65% rate in April and from the 6.18% annual rate increase in the same period last year, the Ministry of Commerce & Industry reported.

Rupee weakened 10 paisa to 64.16 against one U.S. dollar.

The Sensex Index advanced 161.25 or 0.6% to close at 26,586.55. The CNX Nifty rose 31 or 0.4% to 8,013.90.

Tata Motors reported May global sales including Jaguar Land Rover, rose 2.2%. Power Grid said after the government plans to sell 5% stake in the company.