A sudden deterioration in Greece’s debt crisis shook global markets Monday.
Stocks around the world tumbled after a weekend breakdown in negotiations between the Greek government and its creditors left the country teetering on the brink of default and pushed it closer than ever to an exit from the eurozone.
Still, there was little sign of outright panic in the market. European stocks recovered slightly from early losses. Bonds in Italy, Spain and Portugal—highly indebted countries seen as vulnerable to the Greek crisis—also pared losses after initial sharp falls.
The Stoxx Europe 600 was down 2.4% midway through the session, wiping out most of the previous week’s gains on optimism that a deal would be done. Greece’s stock market will remain closed this week along with the country’s banks.
Greek bonds plummeted, pushing the two-year yield more than 12 percentage points higher to 33%. Yields rise as prices fall.
“The sudden turn of events over the weekend has pushed both the future of Greece and the eurozone into uncharted waters,” said Salman Ahmed, a portfolio manager at Lombard Odier Investment Management.
In the U.S., stocks tumbled early, with the Dow Jones Industrial Average down 144 points, or 0.8%, to 17802.
The selling in Europe and the U.S. came on the heels of sharper falls in Asia.
Source: The Wall Street Journal |