European shares hit a near four-month low and yields on lower-rated eurozone sovereign debt climbed to their highest point since November, as financial markets braced for the possibility of Greece defaulting on its debt.
Markets were also cautious ahead of the start of a two-day meeting of the Federal Reserve later yesterday, the latest step towards the US central bank’s first rise in interest rates in almost a decade.
But the focus remained squarely on Greece’s fate in the eurozone after both Athens and its creditors hardened their stances following the latest breakdown in talks.
Greek Finance Minister Yanis Varoufakis told a German newspaper that he is not planning to present new reform proposals at a Eurogroup meeting tomorrow, despite warnings from the rest of Europe that time is running out.
Asked if he would present new plans, Varoufakis said: “No, because the Eurogroup (of eurozone finance ministers) is not the right place to present proposals which haven’t been discussed and negotiated on a lower level before.”
Germany’s Dax, France’s Cac and stock markets in Italy and Spain fell 0.7 – 1.5% as they extended their losses over the last few weeks to between 6% and 8%. Britain’s Ftse was down 0.5%.
The lure of the safety of German state debt also remained strong as Bund yields dropped, periphery eurozone yields pushed higher and the euro stayed highly volatile in the currency market.
It was tossed back up to $1.13 as one-month euro volatility, which hit a three and a half year high on Monday, showed little sign of abating. This also as Europe’s top court said the bond-buying plan European Central Bank chief Mario Draghi introduced in 2012, when he promised to do “whatever it takes” to save the euro, was in line with EU law.
Traders were trying to position too for the Federal Reserve meeting, which will conclude today with a quarterly news conference and updated forecasts.
Having spent much of the Asian session on the front foot, the dollar index was virtually flat again in Europe. “There is going to be some information in the dot charts, but it is going to be what chair Janet Yellen says at the press conference that will matter the most,” said Eric Stein at US-focused investment manager Eaton Vance.
“The pace they go and the terminal rate that they end are more important than the month they first hike. But the market is – wrongly, in my opinion – viewing the timing of the first rate as a signal.”
Global equity markets were feeling the pinch of Greek and Fed uncertainty. “The duo of the FOMC and Greece continue to create jitters – it will be a daily theme for the next month... in the case of the Fed, the next three to four months,” Evan Lucas, market strategist at IG in Melbourne, wrote.
China’s high-flying stocks lost some altitude with a 3% tumble, South Korea’s Kospi fell 0.7% and Japan’s Nikkei dropped 0.6%, as the external factors overcame signs its economy is gaining traction.
Australian shares bucked the trend and ended flat as hopes for more easing by the Reserve Bank of Australia following its latest meeting minutes provided support.
The dollar had also received a small lift after Bank of Japan governor Haruhiko Kuroda said his remarks on the yen last week were not an assessment of nominal forex levels.
Kuroda caused a sharp drop in the dollar last week when he told parliament the yen was already “very weak”.
In the main commodity markets US crude oil rose as a tropical storm hit the coast of oil-producing Texas. US crude rose 1% at 60.14 a barrel, paring the previous day’s losses suffered on Greek debt angst. Brent climbed 0.5% to $65.25 a barrel.
Global economy-sensitive metal copper was stuck near a three-month low at $5787.50 a tonne, while traditional safe-haven gold retained most of its recent gains as it hovered at $1183 an ounce.
Shares slip on Greece
Markets were also cautious ahead of the start of a two-day meeting of the Federal Reserve later yesterday, the latest step towards the US central bank’s first rise in interest rates in almost a decade.
But the focus remained squarely on Greece’s fate in the eurozone after both Athens and its creditors hardened their stances following the latest breakdown in talks.
Greek Finance Minister Yanis Varoufakis told a German newspaper that he is not planning to present new reform proposals at a Eurogroup meeting tomorrow, despite warnings from the rest of Europe that time is running out.
Asked if he would present new plans, Varoufakis said: “No, because the Eurogroup (of eurozone finance ministers) is not the right place to present proposals which haven’t been discussed and negotiated on a lower level before.”
Germany’s Dax, France’s Cac and stock markets in Italy and Spain fell 0.7 – 1.5% as they extended their losses over the last few weeks to between 6% and 8%. Britain’s Ftse was down 0.5%.
The lure of the safety of German state debt also remained strong as Bund yields dropped, periphery eurozone yields pushed higher and the euro stayed highly volatile in the currency market.
It was tossed back up to $1.13 as one-month euro volatility, which hit a three and a half year high on Monday, showed little sign of abating. This also as Europe’s top court said the bond-buying plan European Central Bank chief Mario Draghi introduced in 2012, when he promised to do “whatever it takes” to save the euro, was in line with EU law.
Traders were trying to position too for the Federal Reserve meeting, which will conclude today with a quarterly news conference and updated forecasts.
Having spent much of the Asian session on the front foot, the dollar index was virtually flat again in Europe. “There is going to be some information in the dot charts, but it is going to be what chair Janet Yellen says at the press conference that will matter the most,” said Eric Stein at US-focused investment manager Eaton Vance.
“The pace they go and the terminal rate that they end are more important than the month they first hike. But the market is – wrongly, in my opinion – viewing the timing of the first rate as a signal.”
Global equity markets were feeling the pinch of Greek and Fed uncertainty. “The duo of the FOMC and Greece continue to create jitters – it will be a daily theme for the next month... in the case of the Fed, the next three to four months,” Evan Lucas, market strategist at IG in Melbourne, wrote.
China’s high-flying stocks lost some altitude with a 3% tumble, South Korea’s Kospi fell 0.7% and Japan’s Nikkei dropped 0.6%, as the external factors overcame signs its economy is gaining traction.
Australian shares bucked the trend and ended flat as hopes for more easing by the Reserve Bank of Australia following its latest meeting minutes provided support.
The dollar had also received a small lift after Bank of Japan governor Haruhiko Kuroda said his remarks on the yen last week were not an assessment of nominal forex levels.
Kuroda caused a sharp drop in the dollar last week when he told parliament the yen was already “very weak”.
In the main commodity markets US crude oil rose as a tropical storm hit the coast of oil-producing Texas. US crude rose 1% at 60.14 a barrel, paring the previous day’s losses suffered on Greek debt angst. Brent climbed 0.5% to $65.25 a barrel.
Global economy-sensitive metal copper was stuck near a three-month low at $5787.50 a tonne, while traditional safe-haven gold retained most of its recent gains as it hovered at $1183 an ounce.
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