On 28 May, 2015 – Global markets declined on continued worries over Greece

Stocks were mixed globally as once again, the situation in Greece weighed on investor sentiment. A sell-off in Chinese shares also contributed to investor unease.
United States
Stocks were modestly lower Thursday after a steep sell-off in the Chinese market. Investors also kept an eye on the approaching deadline for Greece to make a debt payment. Both the Dow Jones industrials and Nasdaq retreated 0.2% while the S&P slipped 0.1%.
Traders continued to get mixed messages about the progress of talks between Greece and its creditors. Greece said Wednesday it expected to reach a deal to get more bailout loans in time for it to make a key debt repayment on June 5. But its creditors were quick to temper expectations. Many investors are skeptical that this round of talks will resolve any of the country’s debt issues.
Chipmakers Avago Technologies and Broadcom agreed to merge in a US$37 billion deal. Both companies declined after jumping sharply on Wednesday on rumors of merger talks. Abercrombie & Fitch advanced after the company said it saw sales improve last quarter. The apparel retailer has been under pressure in recent years to revamp its image. United Rentals was down after executives of the world’s largest equipment rental company talked down May activity, according to traders. Caterpillar retreated. GoPro jumped on reports that the action camera maker will launch a new spherical camera mount and a drone.
In economic news, weekly initial jobless claims were up 7,000 to a seasonally adjusted 282,000 in the most recent week, slightly more than expected. Pending home sales for April vaulted 3.4% to its highest level in nine years.
Gold at the afternoon London fixing was down 85 US cents to US$1,185.00. Copper futures were up 0.05% to US$2.77. WTI spot crude was up 34 US cents to US$57.85. Dated Brent spot crude was up 65 US cents to US$62.71. The US dollar was up against the yen, pound and the Australian dollar. However, it declined against the euro, Swiss franc and the Canadian dollar. The Dollar Index slipped 0.2%. The yield on US Treasury 30 year bond was up 2 basis points to 2.89% while the yield on the 10 year note was unchanged at 2.13%. 
Europe
Most stock indices were down thanks to uncertainty regarding Greece. There have been conflicting reports on the state of talks between Athens and its international creditors. Greek Prime Minister Alexi Tsipras said Wednesday that his government is close to reaching a deal with its European and International Monetary Fund lenders. Meanwhile, European Commission Vice President Valdis Dombrovskis said the two sides still have a ways to go. European Central Bank Governing Council member Ewald Nowotny said Thursday the ECB would not break rules to provide any short-term financing for Greece, dampening speculation that the bank may loosen its stance on Greece. The outcome of a meeting of G7 finance ministers in Dresden that ends tomorrow could shed more light on how Greece’s international creditors seek to end the impasse. The CAC and DAX lost 0.9% and 0.8% respectively. The FTSE edged up 0.1% and the SMI was virtually unchanged (down 1.99 points).
Daimler, BMW, Volkswagen, Renault and Peugeot finished lower. Deutsche Post, Bayer and Allianz also retreated. However, Infineon Technologies and Fresenius Medical Care advanced. Drillisch climbed on a broker upgrade. Crédit Agricole and Société Générale declined. Car parts maker Valeo and tire manufacturer Michelin both were down. Both Technip and Total declined. Sports Direct International jumped after updating its full year outlook. Kingfisher, which issued its first quarter trading update gained. Ericsson was up on a broker upgrade.
Eurozone economic confidence remained unchanged at its second highest level in nearly four years in May despite the ongoing Greek crisis. The economic sentiment index held steady at 103.8 in May — the second highest reading since July 2011. First quarter gross domestic product expanded 0.3% and 2.4% on the year.
Asia Pacific
Shares were mostly lower Thursday, although hopes of a Greek debt deal helped to cushion the impact of a major selloff in Chinese and Hong Kong shares. A weak yen and some solid economic data helped drive Japanese stocks to a fresh 15-year high, while Seoul shares posted modest gains after sharp losses the day before.
The Shanghai Composite plunged 6.5% on profit taking following recent sharp gains as more brokerages tightened rules on margin financing ahead of next week’s wave of initial public offerings including nuclear giant China National Nuclear Power that could freeze up to 5 trillion yuan of liquidity. The index posted its biggest single day loss since January 19 when the index 7.7%. The Hang Seng tumbled 2.2%, weighed down by the selloff in mainland shares.
The Nikkei advanced for a 10th straight day to close at a fresh 15-year high after government data showed that April retail sales jumped 5.0% from April 2014, marking the first increase this year. The Nikkei gained 0.4%. Sentiment was aided by a weaker yen, which fell to a 12-year low against the dollar on expectations that the Bank of Japan might take additional easing steps later this year once the Fed begins to tighten. Honda Motors advanced after expanding its Takata-related recalls in Japan to 340,000 cars. Toyota Motor, Nissan Motor and Fuji Heavy Industries, the maker of Subaru cars, closed higher. Sony Corp edged higher after buying the startup Optical Archive from Frank Frankovsky. Panasonic gained on reports it will roll out PV battery storage systems in Australia next week.
Australian shares gave up early gains after new private capital expenditure in the country dropped 4.4% in the first quarter of 2015, missing expectations for a 2.2% decline. On a yearly basis, private capital expenditure sank 5.3%, bolstering the case for further interest rate cuts later this year. Both the S&P/ASX and All Ordinaries were down 0.2%. Miners were mixed.
The Kospi rebounded 0.2% on bargain hunting after two successive days of losses while the Sensex retreated 0.2%.
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 releases April data for unemployment, household spending, consumer price index and industrial production. First quarter gross domestic product will be posted for Switzerland, Canada and India. German April retail sales and French consumption of manufactured goods for April will be released. April Eurozone money supply will be reported. In the US, the second estimate of first quarter GDP will be released. May Chicago PMI and final consumer sentiment will be reported. The meeting of the Group of Seven finance ministers and central bankers ends in Dresden, Germany.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday