Global Markets May Prepare to Look Beyond Greece, Shanghai Rebounds 5%

Nichole Harper
30 Jun, 2015
New York City

World markets were on the defensive for the second day in a row as the prospect of a last minute accord between international lenders and Greece receded. Greece is scheduled to default at midnight and finance ministers are expected to meet tomorrow morning. China took steps to halt bear market.

[R]3:25 PM – World markets were on the defensive for the second day in a row as the prospect of a last minute accord between international lenders and Greece receded. Greece is scheduled to default at midnight and finance ministers are expected to meet tomorrow morning. China took steps to halt bear market.[/R]

World markets turned cautious and European market indexes extended losses after Greek default loomed and the current financial aid package is scheduled to expire at mid night local time.

In the absence of an agreement, Greece will lose access to 10.9 billion in loans to recapitalize banks and 1.8 billion in loans to Greek government. The financially favorable package does not accrue interest and most of the repayment does not begin till 2020.

However, world markets are bracing for Greek loan default and hoping that the euro zone regulators will take enough provision and prevent the crisis from spreading.

In addition, regulators and government in China took steps to halt the bear market that wiped out 20% in the Shanghai index in the last three weeks. The index rebounded 5.5% in today’s session.

On Wall Street, Tollbooth Strategy Index gained 0.3% or 28.81 to 10,609.86.

S&P 500 index rose 0.2% or 4.61 to 2,062.25 and the Nasdaq Composite Index gained 0.5% or 23.45 to 4,982.13.

Crude oil in New York increased 60 cents to $58.93 a barrel and gold fell $7.10 cents to $1,171.90 an ounce.

U.S. Movers

Blackstone Group LP ((BX)) slid 5 cents to $40.58 after the financial advisor agreed to sell its security service unit AlliedBarton Security Services to a France-based Wendel SE for about $1.67 billion.

The transaction is expected to close before the end of the year.

Celgene Corporation ((CELG)) rose 10 cents to $114.99 after the biopharmaceutical company plans to invest about $1 billion in Juno Therapeutics Inc.

Shareholders of Juno will receive cash payment of $150 million and Celgene will acquire 9.14 million shares at $93 per share for a purchase price of $850 million.

Willis Group Holdings Plc ((WSH)) soared 5.3% or $2.41 to $47.79 after the U.K.-focused insurance broker announced an all-stock merger deals with the financial services provider Towers Watson & Co and create $18 billion personnel and risk insurance company.

Shares of Towers Watson & Co dropped 2.1% to $135.01.

European Markets

The U.K. current account deficit in first-quarter narrowed to £26.5 billion from the revised fourth-quarter deficit of £28.9 billion, Office for the National Statistics reported.

Euro-zone seasonally adjusted unemployment rate in May was stable at 11.1% from April but dropped from 11.6% in May 2014, the Statistical Office of the European Communities said.

In a separate report, the department said in a preliminary estimate the annual inflation in the euro area decreased to 0.2% in June compared to 0.3% in May.

In London trading, FTSE 100 index fell 0.9% or 61.45 to 6,556.25 and in Frankfurt the DAX index slipped 0.7% or 81.33 to 10,997.82.

In Paris, CAC 40 index gained 0.4% or 19.84 to 4,889.66.

For the month, FTSE 100 index plunged 6.2%, the DAX index dropped 3.6% and CAC 40 index slumped 3.7%.

For the quarter, FTSE 100 index declined 4.9%, the DAX index plummeted 8.9% and the CAC 40 index declined 5.1%.

For the year to date 2015, FTSE 100 index decreased 1.2%, the DAX index soared 10.8% and the CAC 40 index surged 11.7%.

In the last twelve months, FTSE 100 index dropped 2.8%, the DAX index surged 11.9% and the CAC 40 index jumped 9%.

Saab AB gained 0.5% to €202 after the Sweden-based military defense to civil security products maker signed contracts with the Swedish Defense Materiel Administration for the construction of two new Type A26 submarines and a mid-life upgrade for two Gotland-class submarines worth about 8.6 billion kronor or $1.04 billion.

Banco de Sabadell SA increased 0.8% to €2.19 after the Spain-based financial institution received approval from Britain’s financial regulators for £1.7 billion or $2.7 billion to acquire shares of U.K.-based TSB Banking Group Plc.

Asian Markets

Market indexes in Asia and in Japan traded higher on the hopes that the last minute effort to avoid Greek debt default may lead to an accord.

European Central Bank took steps to prevent the fast changing crisis from spreading to other nations in the euro zone. Sony announced a $3.6 billion offering.

Market indexes in Japan and in Asia jumped on the optimism that Greece and lenders may talk one more time to avert a default.

However, the prospect of any accord are slim as Prime Minister Alexis Tsipras is looking for a referendum in the first week in July.

Tensions in the euro zone remained high and the European Central Bank took steps to avert the contagion from spreading to other struggling economies of Portugal, Ireland and Spain.

The Nikkei 225 Stock Average gained 125.78 or 0.6% to 20,235.73 and the broader Topix index rose 5.58 to 1,630.40.

For the month, Nikkei 225 fell 1.6% but for the quarter jumped 4.2% and for the six-month soared 15.6%.

In the last twelve months, the Nikkei 225 surged 34.1%.

The yen closed at 122.76 against a dollar.

Sony Corporation plunged 8.3% to 3,461.50 yen after the electronics maker plans to sell up to 92 million new shares and convertible bonds to raise about 440 billion yen or $3.6 billion in Japan and overseas to strengthen production of image sensors for smart-phones and other devices.

Sony said 32 million shares will be issued in domestic market and 55.2 million shares will be placed in international markets for as much as 321.5 billion yen and bonds worth 120 billion yen will be placed in Japan only.

The stock offering will starts from August 17 and the exact price will be declare in the nearest date.

Sony also plans to use proceeds from the bond issue to repay maturing debt.

Indexes in Mumbai recovered on the optimism that the latest overture from Greece to sit down for another round of talks may lead to a compromise.

However, tensions remained high in the euro zone as the currency union struggles to stem the contagion effect from spreading to Portugal, Ireland and Spain.

Rupee strengthened 20 paisa to 63.64 against one U.S. dollar.

The Sensex Index advanced 135.68 or 0.5% to close at 27,780.83. The CNX Nifty rose 50.10 or 0.6% to 8,368.50.

For the month, the Sensex Index edged down 0.1% and for the quarter fell 0.7% and for the six-month increased 1.4%.

For the month, the CNX Nifty decreased 0.8% and for the quarter slipped 1.4% and for the six-month gained 1.5%.

Market indexes and the rupee rebounds in India. Bharti Airtel subscribers cross 300 million, the third largest mobile operator in the world.