On 26 May, 2015 – European markets slid on continued concerns over Greece

Stocks in the Asia Pacific were mixed while those in Europe and the US tumbled. Investors continue to be concerned regarding Greece. Mixed US economic data also weighed on traders.
United States
Stocks declined, pushing the S&P to its biggest percentage drop in three weeks on Tuesday. Concerns about Greece’s financial crisis and some upbeat US economic data fueled expectations that a rate increase could come sooner rather than later. Both the Dow Jones Industrials and the S&P lost 1.0% while the Nasdaq retreated 1.1%. Traders said volume was slightly busier than last week — when stock-trading volumes hit some of their lowest levels of the year — but still below average.
The pullback followed a raft of economic data Tuesday — including an early report showing demand for durable goods was down 0.5% from a month earlier thanks to the very volatile transportation sector. However, nondefense capital goods excluding aircraft was up 1.0% after an even stronger 1.5% gain in March. The gains reflect strength in business investment which has been soft. Home prices continued to climb in March, but less than expected while both new home sales and consumer confidence climbed.
Shares of Time Warner Cable jumped after news that Charter Communications had struck a US$55 billion cash and stock deal for the cable provider. Charter also rallied. Energy and raw-material companies retreated as the dollar jumped. Apple and Intel paced a drop in technology shares. Hewlett-Packard and Google were down.
Worries persist that Greece might miss an International Monetary Fund repayment on June 5 if it fails to receive bailout funds from creditors demanding it make new reforms to its economy. Talks to reach a deal resumed Tuesday after a weekend break, but it is unclear whether an agreement can be reached in time.
Fed Vice Chairman Stanley Fischer said central bankers are weighing the risk of raising interest rates prematurely against the danger of having to play catch-up if they wait too long. He also said policy makers will consider global growth as they begin to raise interest rates, and they could increase them more gradually should the world economy falter.
Gold at the afternoon London fixing was down US$18.70 to US$1,185.40. Copper futures were down 1.3% to US$2.77. WTI spot crude was down US$1.58 to US$58.14. Dated Brent spot crude was down US$1.68 to US$63.84. The US dollar was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 1.1%. The yield on US Treasury 30 year bond was down 9 basis points to 2.89% while the yield on the 10 year note declined 8 basis points to 2.13%. 
Europe
Stocks dropped Tuesday thanks to continued but elevated concerns about Greece. The FTSE declined 1.2%, the CAC was down 0.7%, the DAX dropped 1.6% and the SMI lost 0.9%.
Statements from Greek government officials over the weekend unsettled investors. The Interior ministry stated that the country’s loan repayment to the IMF would not take place. However, a government spokesman stated the opposite shortly afterwards. On Monday, Greece’s government ruled out imposing controls over capital flows over the upcoming long weekend, after an opposition lawmaker suggested the move if the country fails to strike a deal with its creditors soon. Sentiment was also negatively affect by political uncertainty in Spain, where Prime Minister Mariano Rajoy’s Popular Party suffered its worst result in 20 years in a municipal election, as the voters punished his government for four years of austerity and a raft of corruption scandals before the general election due in November.
E.ON and RWE declined. Deutsche Bank and Commerzbank retreated. British banks with the most exposure to the Eurozone such as Royal Bank of Scotland, Barclays and Lloyds were down. Asia-exposed banks including Standard Chartered and HSBC also retreated. Total and Technip dropped. However, Vivendi advanced. Ryanair jumped after reporting strong growth in full year profit. Easyjet also climbed. Weir Group and Royal Mail advanced. Mining stocks were weak thanks to falling commodity prices. Fresnillo, Randgold Resources, Anglo American and Antofagasta declined. Altice sank — the company was reportedly involved in talks with Time Warner Cable about a possible combination. However, Time Warner Cable has agreed to be acquired by Charter Communications.
Asia Pacific
Stocks reversed early losses to end mostly higher Tuesday. Chinese shares continued to rally and a rebound in iron ore prices lifted resource stocks. With the dollar hitting a fresh one month high against a basket of major currencies, investors eagerly awaited a slew of US data on durable goods orders, new home sales and consumer confidence later in the global market day for further clues to the Fed policy outlook.
The Shanghai Composite rallied sharply by 2.0% to hit another seven year high, with technology stocks pacing the gains after Shanghai announced an ambitious plan to build the city into a globally competitive technological innovation center. Defense related stocks also gained ground after China unveiled a new defense strategy to boost its naval capability and counter complicated threats and challenges in the oceans. The Chinese government said it would slash import tariffs on consumer goods such as cosmetics, shoes, clothes and diapers in June, in a bid to boost domestic consumption amid slowing economic growth. Import taxes on some products will be lowered by an average over 50%, starting June 1. The Hang Seng added 0.9% on expectations of more money inflows from the mainland after policymakers said they would allow fund managers to sell Hong Kong-registered funds directly to Chinese investors.
The Nikkei edged up 0.1%. Japan Airlines and ANA Holdings gained. Honda Motor, Fanuc and Sharp were up underpinned by a weaker yen. Toshiba edged up on a Nikkei report that the industrial conglomerate will not pay a year-end dividend for the 12 months through March 31, 2015. Mitsubishi Heavy Industries declined on reports that it plans to buy a stake in Japan Tunnel Systems, a joint venture firm set up by IHI and JFE Engineering. Suntory Beverage & Food was down after the company said it would buy vending machine operations from Japan Tobacco for about ¥150 billion. Japan Tobacco on profit taking after rising the day before.
Australian shares were up, led by miners after iron ore prices rose two% overnight, adding to Friday’s strong gains. The S&P/ASX and All Ordinaries both gained 0.9%. BHP Billiton and Rio Tinto both were up. Fortescue Metals Group soared on reports that two major Chinese companies were looking to take a stake in the iron ore producer. The four big banks also advanced. The Kospi slipped 0.1% as trading resumed after Monday’s public holiday. The Sensex lost 0.4%.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
In Germany, Gfk consumer climate for June will be released. The Bank of Canada announces its monetary policy decision.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday