On 25 June, 2015 – Global markets declined

With little economic news, investors focused on the ongoing Greek tragedy.
United States
Stock indices ended a quiet session with modest losses Thursday, but healthcare stocks rallied after the US Supreme Court upheld subsidies key to President Barack Obama’s signature healthcare reform law. Stocks softened in afternoon trading as Greece’s debt talks were extended into the weekend. The Dow Jones industrials were down 0.4%, the S&P declined 0.3% and the Nasdaq lost 0.2%.
Crucial talks between Greece and its creditors ended without result early Thursday, casting fresh doubt over the country’s future in the euro and piling pressure on negotiators to reach a deal. After an eight hour meeting with the leaders of the three main institutions handling his country’s debts, Prime Minister Alexis Tsipras of Greece left talks in Brussels without speaking to reporters.
Market sentiment improved early in the day by evidence that US consumers were confident enough to spend at the highest rate in nearly six years. Consumer spending was up 0.9% in May, an indication that solid hiring and cheaper gas are giving a boost to the economy. Health care stocks, especially hospital operators, advanced sharply after the Supreme Court upheld the nationwide tax subsidies under President Barack Obama’s health care overhaul. Humana, HCA Holdings, Tenet Healthcare and Eli Lilly rallied. Seagate Technology and Western Digital retreated. Walt Disney advanced after it said it would offer a higher, more frequent dividend.
Gold at the afternoon London fixing slipped US$1.10 to US$1,172.65. Copper futures were down 0.3% to US$2.62. WTI spot crude was down 63 US cents to US$59.64. Dated Brent spot crude was down 24 US cents to US$63.25. The US dollar was up against the Swiss franc. It was virtually unchanged against the euro. However, it declined against the yen, pound and the Canadian and Australian dollars. The Dollar Index slipped 0.1%. The yield on US Treasury 30 year bond was up 2 basis points to 3.17% while the yield on the 10 year note added 4 basis points to 2.41%.
Europe
Most stocks ended lower Thursday with little to distract investors from the ongoing Greek saga. Greece failed again to clinch a deal with its international creditors Thursday, setting up a last-ditch effort on Saturday to avert a default next week amid fears of financial market turmoil. The FTSE was down 0.5%, the CAC slipped 0.1% and the SMI lost 0.4%. The DAX was virtually unchanged (up 1.87 points). However, the MIB jumped 0.9%, in contrast to other indices.
An earlier meeting between Greek Prime Minister Alexis Tsipras and the heads of the three institutions overseeing the bailout again failed to come up with a common proposal on policy overhauls and budget cuts to the ministers. Instead, the two sides presented different plans to finance ministers in a sign of the persistent divisions. Eurozone finance ministers ended their third meeting without agreement after the three creditor institutions offered a final cash for reform proposal in a showdown with the Greek government. It should be noted that any deal would still need to be approved by the Greek and German parliaments. Lingering differences were confirmed by Eurogroup President Jeroen Dijsselbloem, who said on Thursday that Greece did not consent to the proposal being put to finance ministers’ consideration.
Both RWE and E.ON declined. Deutsche Bank and Commerzbank advanced. Vivendi declined after it said it now owns 14.9% of Telecom Italia’s ordinary shares and has thus replaced Telefonica as the company’s largest shareholder. Both Technip and Total retreated. Sage Group gained on a broker upgrade. Tesco climbed on reports that private equity firms have expressed interest in the company’s South Korean assets. Admiral Group dropped on a broker downgrade. Hennes & Mauritz retreated after it reported lower margins for the second quarter and warned of higher costs.
Asia Pacific
Stocks retreated Thursday after bailout negotiations between Greece and its international creditors hit a stalemate overnight, making the country’s future in the European Union shaky. Greece is on the verge of defaulting on its debt if a deal fails to materialize before the June 30 deadline, when Greece has to repay €1.6 billion to the International Monetary Fund.
The Nikkei was down from an 18-1/2-year high hit on Wednesday, as the safe haven yen strengthened against the dollar and euro on renewed uncertainty over Greece after Athens apparently rejected a series of EU counter-proposals. The index was down 0.5%. Among companies that declined were Fuji Electric, Chubu Electric Power, Mitsui Chemicals, Fanuc, Mitsui Fudosan and TDK. Automakers including Toyota, Nissan and Mazda Motor also declined.
Both the All Ordinaries and the S&P/ASX lost 0.9% as the Greek debt drama continued with no agreement on a deal to avert a default. Banks and miners retreated. The Kospi was virtually unchanged (down 0.47 point) on worries about the economy after the finance ministry slashed its economic growth forecast for the year to 3.1% from 3.8%, citing slumping exports and the outbreak of Middle East Respiratory Syndrome (MERS).
The Shanghai Composite tumbled 3.5% after gaining a total of 4.7% on Tuesday and Wednesday. Once again, stocks declined on valuation concerns. The Hang Seng lost 0.9% after rising for four consecutive days. The Sensex however rallied 0.6% thanks to good monsoon rains in many parts of the country and the government’s decision to launch three flagship schemes. The south west monsoon rains have been 13% above normal so far in June, raising hopes the Reserve Bank of India will cut rates again in October instead of delaying it into 2016.
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*
Japan reports May consumer prices, household spending and unemployment. The Eurozone posts May money supply. The US releases final June consumer sentiment.
Anne D PickerChief EconomistEconoday