On 05 June, 2015 – European markets slid as Greece delayed a crucial loan repayment

Stocks retreated Friday and for the week as worries about the Greek situation lingered. Despite the better than expected US employment data, stocks retreated.
United States
Stocks ended mostly lower in lackluster trading after a better than anticipated May US employment report. Traders and investors said the May jobs report offered evidence that the US economy was pulling itself out of its first quarter slump. While a firming economy is usually a good backdrop for stocks, investors say the hiring pickup keeps the Federal Reserve on track to start raising short term interest rates as soon as September. The Dow Jones industrials lost 0.3%, the S&P was down 0.1% and the Nasdaq added 0.2% on the day. For the week, the Dow and S&P were 0.9% and 0.7% lower respectively while the Nasdaq was virtually unchanged.
Employers added 280,000 workers to their payrolls in May while the unemployment rate inched up to 5.5% from 5.4% in April, a result of more people returning to the workforce in search of a job. March and April employment were revised higher for the two months by a combined total of 32,000. The upbeat data provides further evidence of an economic rebound in the second quarter but also led to renewed concerns about the outlook for interest rates.
The Greek government’s decision late Thursday to bundle four debt payments to the International Monetary Fund totaling €1.6 billion stoked fears about the country’s finances. It is the first time a developed country has taken the option of rolling debt payments together. At an emergency session of Greece’s parliament, Prime Minister Alexis Tsipras said his government cannot accept “irrational” proposals like one made this week by the international organizations overseeing Greece’s bailout.
Regeneron Pharmaceuticals advanced after a preliminary FDA review of an experimental drug it makes with Sanofi. Newmont Mining retreated on declining gold prices. Zumiez dropped as it estimated current quarter profit and revenue below expectations. Financial stocks including JP Morgan and Goldman Sachs Group gained on expectations that higher rates will boost margins.
Gold at the afternoon London fixing was down US$11.40 to US$1,164.40. Copper futures were up 0.2% to US$2.69. WTI spot crude was up US$1.13 to US$59.13. Dated Brent spot crude was up US$1.28 to US$63.31. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollar. It However, it declined against Canadian dollar. The Dollar Index was up 0.9%. The yield on US Treasury 30 year bond was up 7 basis points to 3.11% while the yield on the 10 year note added 10 basis points to 2.41%.
Europe
European shares retreated on the day and week after Greece decided to delay the crucial loan repayment to the International Monetary Fund that had been scheduled for June 5. However, the markets recovered some ground in the afternoon following the release of the stronger than expected US employment report for May. The FTSE declined 0.8%, the SMI retreated 1.4% and both the CAC and DAX lost 1.3%. The indices lost 2.6%, 1.4%, 1.7% and 1.9%, respectively on the week.
Greece asked the IMF on Thursday to bundle the four payments due to the lender this month, totaling €1.6 billion into a single payment to be made on June 30. It was the first time during the five year long crisis that the country delayed a payment to the IMF. The surprise announcement from Greece came just hours after IMF Managing Director Christine Lagarde expressed confidence that the government would honor the payment due Friday. However, German Chancellor Angela Merkel said that the talks were nowhere near a conclusion.
Germany’s Bundesbank raised its economic growth forecast. In a semi-annual report released Friday, Bundesbank economists forecast real gross domestic product to grow 1.7% this year, faster than the prior estimate of 1%. For next year, growth is expected to be 1.8% instead of 1.6%. The British Chambers of Commerce downgraded its UK growth projection for this year citing the weaker than expected expansion in the first quarter. The BCC expects the economy to expand 2.3% this year instead of 2.7%. Nonetheless, the slowdown is expected to be temporary.
Commerzbank and Deutsche Bank retreated in Germany and in Paris, Crédit Agricole, Société Générale and BNP Paribas declined. Fresenius, Fresenius Medical Care and Bayer closed lower. Auto makers Volkswagen, Daimler and BMW declined. Vodafone dropped after the company confirmed that it is involved in asset swap talks with Liberty Global, not merger talks. Tesco was down. The supermarket chain is reportedly considering a sale of its South Korean business. WM Morrison Supermarkets also was lower. British American Tobacco and Imperial Tobacco retreated. Nestle was down in Zurich after the Food Safety and Standards Authority of India ordered recall of nine variants of its Maggi noodles from the Indian market on safety concerns.
Asia Pacific
Shares here retreated — all except the Shanghai Composite. The index added 1.5% to end the week 8.9% higher and at a new seven year peak. Elsewhere, investors adopted a cautious stance after Greece delayed a key debt payment and the International Monetary Fund downgraded its outlook for the US economy this year, citing renewed economic uncertainty and weak inflation that is well short of the Federal Reserve’s 2% target. The IMF also urged the US. Federal Reserve to delay a rate increase until the first half of 2016. The US employment report was released after markets in the Asia Pacific were closed for the week.
Chinese shares rose sharply ahead of trade and consumer price data that will be released next week. However, the Hang Seng was down 1.1% following losses in the US and European markets during the Thursday global market day. The Nikkei slipped 0.1% and lost 0.5% during the week. Banks declined. Sumitomo Rubber Industries was down after US tire maker Goodyear Tire & Rubber agreed to dissolve its joint venture agreement with the Japanese company that was formed in 1999. Kirin Holdings and Suntory gained on a Nikkei report that the brewers are boosting whiskey production in the US to meet growing demand worldwide.
Both the S&P/ASX and All Ordinaries edged down 0.1%, dragged down by banks including National Australia Bank, ANZ, Commonwealth and Westpac. Miners were mixed after iron ore prices rose overnight. The S&P/ASX was down 4.9% on the week and the All Ordinaries declined 4.7%. The Kospi lost 0.2% Friday and 2.2% on the week. Sentiment was hit by an ongoing impasse between Greece and its creditors. The Sensex was down 0.2% and 3.8% on the week.
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*
Monday — Japan releases its second estimate of first quarter gross domestic product. China releases its May merchandise trade balance. Germany reports April merchandise trade and industrial production. G-7 meets in the German Alpine resort town of Garmisch-Partenkirchen.
Tuesday — China posts May consumer and producer price indices. The UK reports April merchandise trade deficit. The Eurozone posts its second estimate of first quarter GDP. In the US, NFIB reports its small business optimism index for May. Both JOLTS and wholesale trade are posted for April.
Wednesday — Japan reports May producer price index and April machine orders. France, Italy and the UK report April industrial production. First quarter quarterly services survey will be reported in the US.
Thursday — Australia releases its May labour force survey. In the US, May retail sales and import/export prices along with April business inventories will be released. Weekly money supply, Fed balance sheet and jobless claims will be reported.
Friday — India reports may consumer prices and April industrial production. The Eurozone releases April industrial production. The US posts May producer prices and June preliminary consumer sentiment.
*Note — all releases are listed in local time.