Global Markets in Retreat on Merger Monday, Greek Crisis Intensifies

Nichole Harper
29 Jun, 2015
New York City

Global markets faltered and the euro was on the defensive after Greece imposed capital controls and tempers rose in the euro zone. Merger Monday saw a flurry of activities on both sides of the Atlantic.

[R]12:40 PM – Global markets faltered and the euro was on the defensive after Greece imposed capital controls and tempers rose in the euro zone. Merger Monday saw a flurry of activities on both sides of the Atlantic.[/R]

Market indexes on Wall Street and around the world declined after Greece imposed capital controls and closed down banks at least for two days after a failed last ditch effort to release the latest tranche of international bailout.

Though the outcome not expected, Greek situation has been simmering for years and took a confrontational tone in the last two months with both sides blaming other.

Markets in Europe declined and plunged in Asia and in New York and the euro eased against the U.S. dollar.

On Wall Street, Tollbooth Strategy Index slipped 1.1% or 116.43 to 10,690.82.

S&P 500 index dropped 1.2% or 25.42 to 2,076.23 and the Nasdaq Composite Index slumped 1.4% or 71.69 to 5,008.92.

Crude oil in New York slipped $1.29 to $58.34 a barrel and gold gained $4.90 cents to $1,178.10 an ounce.

U.S. Movers

General Electric Co ((GE)) fell 21 cents to $26.89 after the diversified conglomerate agreed to sell its U.S., Mexico, Australia and New Zealand fleet businesses held by financial unit GE Capital to Canada-based Element Financial Corp for $6.9 billion or about C$8.6 billion.

The U.S. and Mexico part of the deal is expected to close in the third-quarter and the Australia and New Zealand part in the fourth-quarter.

Separately, the diversified conglomerate signed an agreement for the potential sale of its European fleet businesses to the U.K.-based privately held Arval, a subsidiary of BNP Paribas. The transaction is expected to close in fourth-quarter.

Gannett Co., Inc ((GCI)) tumbled 62.5% or $23.20 to $13.95 after the media and marketing company today completed the previously announced split-off in two publicly traded companies, print and broadcasting.

Both companies will be headquartered in McLean, Virginia.

SYSCO Corporation ((SYY)) gained 3 cents to $38.40 after the foodservice provider terminated its merger agreement with US Foods a days after the U.S. District Court granted the Federal Trade Commission request for a preliminary injunction to block the proposed Sysco-US Foods merger.

This action also terminates an agreement with Performance Food Group to acquire US Foods facilities in 11 markets.

Under terms, Sysco had agreed to pay break-up fee of $300 million to US Foods and $12.5 million to PFG.

Earlier, Sysco had proposed to acquire the US Foods for about $3.5 billion.

European Markets

In London trading, FTSE 100 index slumped 1.4% or 95.38 to 6,658.25 and in Frankfurt the DAX index dropped 2.7% or 310.96 to 11,183.08.

In Paris, CAC 40 index declined 3% or 151.94 to 4,808.09.

Bayerische Motoren Werke AG declined 3.8% to €99.58 after Reuters said the Germany-based auto maker and Australia-based Macquarie Group Ltd and the U.S.-based private equity firms are planning to to bid for Australia and New Zealand Banking Group''s car and equipment loan business of about more than $6 billion.

Deutsche Boerse AG dropped 2.4% to €75.23 after the Germany-based exchange operator is in talks with Switzerland-based Six Group to buy the remaining stakes in the equity index joint ventures Stoxx AG and Indexium AG for about 650 million Swiss francs or $692 million.

Deutsche Boerse already acquired 50.1% in STOXX AG and 49.9% of Indexium AG.

Novartis AG fell 0.6% to 92.70 Swiss francs after the Switzerland-based drug-maker agreed to acquire the U.S.-Australian privately-held biotech company Spinifex Pharmaceuticals Inc, a developer of treatments for neuropathic pain, for about $200 million.

The transaction is expected to close in the second-half of this year.

Asian Markets

Markets in Tokyo plunged after Greece imposed capital controls and shunned banks from lending and normal activities after the collapse of weekend talks with European lenders.

Investors sold stocks in Japan and in Asia and sought safety in stronger currencies like yen and in the U.S. dollar.

On the domestic economic front, industrial production declined but retail sales rose.

The seasonally adjusted industrial production in May dropped 2.2% following the 1.2% gain in April, the Ministry of Economy, Trade and Industry reported.

For the year, industrial output declined 4% after 0.1% decrease in the previous month.

In a separate report the Ministry said retail sales in May jumped 3% to 11.77 trillion yen following 4.9% climb in April.

Large-scale sales from large retailers soared 5.3% to 1.69 trillion yen compared to the 8.6% surge in April and wholesale sales jumped 4% to 24.63 trillion yen from in the previous month.

Commercial sales slipped 2.2% to 36.40 trillion yen from 2.5% increase in last month.

The Nikkei 225 Stock Average declined 596.20 or 2.9% to 20,109.95 and the broader Topix index dropped 42.21 or 2.5% to 1,624.82.

The yen closed at 122.76 against a dollar.

Market indexes in India and in Asia plunged more than 2% at worst after Greece imposed capital controls and closed all banks after talks with international lenders failed to win the release of next tranche of bailout.

Sensex index in Mumbai in a knee-jerk reaction dropped as much as 600 points at the opening following more than 2% decline in Asian markets. However, by the end of the session, indexes recovered and trimmed losses.

Rupee weakened 25 paisa to 63.89 against one U.S. dollar.

The Sensex Index dropped 166.69 or 0.6% to close at 27,645.15. The CNX Nifty slipped 62.70 or 0.8% to 8,318.40.

In Asian markets trading, Nikkei 225 Average in Tokyo declined 2.9% and in Hong Kong the Hang Seng index dropped 2.6%.

Markets in Shanghai and Sydney fell more than 2% and in Seoul eased more than 1%.

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