On 12 May, 2015 – Global markets were mixed on continued worries over Greece and run up in bond yields

US and European markets declined on fears of a global sell-off in government bonds; Asian markets were mixed on global cues.
United States
Stocks closed slightly lower after recouping much of an earlier plunge. Investors are beginning to worry about a global selloff in government bonds that has been driving long term borrowing costs higher and that, in turn, will act as a drag on growth. The Dow Jones industrials lost 0.2% and the S&P and Nasdaq both gave up 0.3%. Traders around the world have been selling off government bonds since last month, a trend that has increasingly rattled investors.
AOL shares surged Tuesday after Verizon said it would pay US$4.4 billion for the company. Verizon said that AOL’s technology would help it serve ads on an online “mobile first” service it is planning this summer.
Offshore drillers advanced, helped by the continued rally in oil and encouraging results from the sector. Oil built on its second quarter advance after OPEC and the US Energy Information Administration both raised their forecasts for oil demand growth this year. Among the companies that gained were Transocean, Diamond Offshore Drilling, Noble, Seadrill and Pacific Drilling. Pall soared on a report that it’s close to being acquired. International Flavors & Fragrances declined after the company warned that its earnings growth could be muted this year should the dollar’s strength continue to have a negative impact on sales. Gap and cloud computing company Rackspace Hosting each reported quarterly results that were crimped by the strong US dollar. Depomed slumped after the drug maker reported first quarter results that fell short of expectations.
Gold at the afternoon London fixing was up US$2.25 to US$1,191.50. Copper futures were up 1.0% to US$2.93. WTI spot crude was up US$1.30 to US$60.55. Dated Brent spot crude was up US$1.76 to US$66.67. The US dollar was down against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.6%. The yield on US Treasury 30 year bond was down 2 basis points to 3.01% while the yield on the 10 year note slipped 1 basis point to 2.26%. 
Europe
European markets dropped Tuesday. Investor concerns over the situation in Greece continued to weigh on sentiment. Weakness in European government bonds also played a role in the decline. The FTSE lost 1.4%, the CAC declined 1.1%, the DAX retreated 1.7% and the SMI was 0.8% lower.
A Greek central bank official told Reuters the country had to empty an emergency International Monetary Fund holding account to repay €750 million due to the international lender. The move allowed Greece to avoid default but underscores the dire state of the country’s finances as it continues to try to reach a deal with its creditors. Greek Finance Minister Yanis Varoufakis told reporters the financial situation of the country is a terribly urgent issue. Eurogroup Chairman Jeroen Dijsselbloem welcomed the progress in Greece talks but he said more time is needed to bridge the remaining gaps and to reach a comprehensive agreement.
Potash maker K+S declined after the company reported first quarter results. Deutsche Post dropped after the logistics firm reported a lower quarterly profit. ThyssenKrupp climbed after it lifted its forecast for full year adjusted operating profit. Evotec gained after the company lifted its revenue forecast for the year. Automakers Volkswagen, Daimler, BMW, Peugeot and Renault retreated. EasyJet dropped after the airline said expects revenue per seat in constant currency for the second half to decrease by low single digit percentage points. International Consolidated Airlines Group also declined. Experian climbed after its full year report. Lloyds also edged up after Britain sold another £500 million of shares in the bank.
UK industrial production unexpectedly grew in March for a second straight month led by a robust gain in oil and gas extraction and stronger manufacturing output, giving some respite from concerns of a slowdown in the economic growth momentum. Industrial production rose 0.5% from February while manufacturing output was up 0.4%. Economic growth quickened in the three months to April from the March quarter, according to monthly gross domestic product estimates from the National Institute of Economic and Social Research. Output grew by 0.4% in the three months ending in April after growth of 0.3% in the three months to March.
Asia Pacific
Asian shares were mixed Tuesday after a meeting between Greece and its creditors yielded little progress. Euro-area government bonds slid and oil prices dropped on fears of oversupply, adding to investor anxiety over whether a Greek exit from the Eurozone would be manageable.
The Shanghai Composite climbed 1.6% extending Monday’s 3% rally after the People’s Bank of China cut interest rates for the third time in six months to help the sluggish economy. However, the Hang Seng was down 1.1% as gains in sovereign bond yields globally and anxiety over Greece’s debt crisis kept investors risk averse.
The Nikkei was unchanged amid speculation that the Bank of Japan would increase asset purchases, which could include exchange traded funds. Sharp rebounded after plunging the previous day on reports that the struggling electronics maker may reduce capital and issue preference shares as part of a drastic restructuring to wipe off years of accumulated losses. Mitsui Fudosan closed marginally higher as the realty firm reported a 30% increase in net income for fiscal 2014. Suzuki Motor climbed after the company said it expects a 5.9% increase in operating profit to ¥190 billion yen for the current financial year. Nissan Motor, Mazda and Toyota Motor also advanced. Toshiba slid, extending Monday’s losses, after the industrial conglomerate withdrew its forecast for the fiscal year ended in March, citing improper accounting on infrastructure projects. SoftBank retreated a day after unveiling a management reshuffle.
Australian shares advanced as iron ore prices rose on optimism about China and banks gained ground on bargain hunting following recent sharp losses. Market attention was focused on the nation’s federal budget due to be unveiled later in the day. The S&P/ASX 200 index climbed 0.9% while the All Ordinaries added 0.8%. The Kospi declined 0.8%.
The Sensex tumbled 2.3%. Investors worried over the delay in land and tax reforms, anxieties over retrospective taxation of foreign funds, fresh selling in global bond markets and lingering concerns over a Greek exit from the Eurozone. Also, the rupee dropped against the US dollar, raising concerns that it would create a vicious cycle between rupee and domestic shares and lead to higher volatility and more capital outflows. Investors also awaited industrial output and inflation data due out later in the day for further clues on whether the Reserve Bank of India will cut its repo rate for the third time this year.
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*
China posts April retail sales and industrial output. Flash first quarter gross domestic product will be reported for the Eurozone, France, Germany and Italy. Germany, Italy and France release April consumer price indices. The Eurozone also reports March industrial output. The UK releases its April labour market report. The Bank of England publishes its quarter Inflation Report. The European Central Bank publishes minutes from its meeting on April 15. In the US, April retail sales and import/export price indices will be released along with May Atlanta Fed business inflation expectations and March business inventories.
*Note — all releases are listed in local time.