Market Update & Important Indicators
Stocks around the world fell sharply Monday after a tumultuous weekend in Greece's debt crisis, but investors said the broader impact on financial markets was limited because Greece is no longer so enmeshed in the region's financial system.U.S. stocks fell and Treasury bonds advanced Monday, as a worsening in Greece's debt crisis jolted global markets and pushed the country closer to an exit from the eurozone. Stocks drifted lower after a senior Greek government official said that Greece won't make a debt repayment to the International Monetary Fund due Tuesday. The Dow Jones Industrial Average fell 2.0% to 17,596 and the S&P 500 index lost 2.1%, to 2,058.
Bonds in Italy, Spain and Portugal–highly indebted countries seen as vulnerable to shocks from Greece weakened, but the moves were modest relative to the heavy selloffs seen during previous bouts of the crisis. In European indecies the STOXX 50 lost 4.2%, the French CAC 40 lost 3.7% and the German Dax dropped 3.6%.
Australian stocks, being the first market to open, were the first to feel the Greek impact. Heavy losses were incurred in resource stocks where Woodside Petroleum Ltd. (WPL) lost 2.4%, Santos Ltd. (STO) fell 1.4% and Origin Energy Ltd. (ORG) declined 3.5%. Among the mining companies, BHP Billiton Ltd. (BHP) dropped 2% and Rio Tinto Ltd. (RIO) ended down 1.5%, while iron-ore producer Fortescue Metals Group Ltd. (FMG) shed 3% after the price of the steelmaking commodity fell 1% on Friday to US$60.70/dmt.
China's main stock index entered bear-market territory Monday as a surprise interest-rate cut over the weekend failed to lift the market amid concerns over investors' debt levels, while uncertainty about Greece shook sentiment elsewhere in the region. The Shanghai Composite Index closed down 3.3% after a day of choppy trading in which the market shifted regularly from positive to negative territory. The index is 22% lower than a high on June 12, crossing a 20% threshold that defines a bear market.
Metals on the LME were mixed with copper gaining 0.7% to US$2.62/lb and nickel falling 5.0% to US$5.35/lb. Gold edged higher to US$1180/oz, while Brent dropped 2.0% to US$62.01/bbl.
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