While you were sleeping: Greece rattles nerves
March 30 (BusinessDesk) - Renewed concerns about the outlook for Greece, combined with mixed corporate and economic news
in the US, is taking a bit of the shine off a superb first quarter for global equities.
At midday, all three key benchmarks on Wall Street were lower. The Dow Jones Industrial Average is down 0.6 percent, the
Standard & Poor’s 500 Index is 0.8 percent lower and the Nasdaq has shed 1 percent.
It was just as tough in Europe. The Stoxx Europe 600 Index has closed down 1.3 percent.
The catalyst for today’s weakness was a warning from ratings agency Standard & Poor’s that Greece hasn’t yet dodged its debt crisis. Moritz Kramer, head of sovereign ratings at S, told reporters at a London event that it’s likely Greece will need to restructure its debt again and its bailout
partners may be involved.
Separately, Spanish and Italian bonds fell and German bunds rose. There’s increasing concern that Spain is on the verge
of a debt crisis that could lead it to ask for outside help. The concern was heightened today amid a general strike
ahead of tomorrow’s budget.
Europe’s finance ministers are set to meet tomorrow in Copenhagen with reports they will focus on the debt situation.
Bloomberg says the ministers are near agreement on increasing the limit on rescue funds to 940 billion euros until mid
2013 to bolster both Spain and Italy.
The ministers will have at least one positive start to their talks: Fitch Ratings has affirmed its AAA rating on the
European Union.
Still, investors are looking for more reassurance - after a number of somewhat disappointing economic reports from
China, Europe and the US in the last few weeks - that it’s time to bet on the future.
“It’s very reasonable that trading is soft as investors consider their positions in the wake of some soft data
recently,” Michael Droescher Joergensen, an equity strategist at Nykredit Bank in Copenhagen, told Bloomberg News.
The latest US jobless claims data was one reason why Wall Street was off today. While claims fell to a four-year low
last week, they didn’t fall as fast as economists hoped.
"We've had an incredible rally, and in order for us to keep moving up, we're going to need data that is very strongly
positive, not just lukewarm," Michael Yoshikami, chief executive officer at Destination Wealth Management in Walnut
Creek, California, told Reuters.
Each of the S’s industry sectors were lower, with financials pacing the declines.
Electronics retailer Best Buy has shed about 10 percent after saying sales were weaker than expected, and that it was
going to shut 50 stores.
(BusinessDesk)