Europe stock mar­kets drop on Grexit fears

The China Post - - BUSINESS INDEX & -

Euro­pean stocks dropped on Mon­day as in­vestors feared Greece could be head­ing for a eu­ro­zone exit, while fall­out from the Tu­nisia at­tacks hit the travel sec­tor.

Asian shares also tum­bled be­cause of Greece and ow­ing to un­ease over main­land China’s econ­omy, traders said.

Around mid­day in Frank­furt, the DAX 30 was show­ing a loss of 3.33 per­cent to 11,109.16 points com­pared with Fri­day’s clos­ing level. Many Euro­pean mar­kets had opened up with declines of more than 4.0 per­cent be­fore trim­ming losses.

In Paris the CAC-40 slid 3.40 per­cent to 4,887.21 points. Mi­lan shrunk by 3.72 per­cent in value and Madrid shed 3.66 per­cent.

Out­side the eu­ro­zone, Lon­don’s bench­mark FTSE 100 lost 1.59 per­cent to 6,609.69 points.

Greek author­i­ties or­dered Athens’ stock mar­ket to close Mon­day, along­side a de­ci­sion to shut the coun­try’s banks for a week and im­pose cap­i­tal con­trols — caus­ing shares in Euro­pean banks to crash on Mon­day.

Deutsche Bank shed 5.31 per­cent, So­ci­ete Gen­eral plunged 4.57 per­cent and HSBC re­treated 1.86 per­cent.

A week­end of high drama be­gan with Prime Min­is­ter Alexis Tsipras’s un­ex­pected call for a July 5 ref­er­en­dum on cred­i­tors’ latest re­form pro­pos­als af­ter bailout talks in Brus­sels col­lapsed.

In re­sponse, an­gry EU and IMF cred­i­tors re­jected a re­quest to ex­tend the na­tion’s bailout be­yond its June 30 ex­piry date, spark­ing fears Greece could de­fault on a key debt pay­ment to the IMF due the same day, and pos­si­bly crash out of the eu­ro­zone.

Asia Mar­kets Hit by Greece Fears, Shang­hai Plunges

Asian eq­ui­ties tum­bled Mon­day on ex­pec­ta­tions of a Greek eu­ro­zone exit af­ter Athens an­nounced a ref­er­en­dum on cred­i­tors’ pro­pos­als, while Chi­nese stocks gy­rated wildly af­ter los­ing some 20 per­cent in the past two weeks.

Shang­hai saw a 10 per­cent swing from gains to losses, ex­tend­ing a painful sell-off since hit­ting a June 12 peak. A week­end cen­tral bank in­ter­est rate cut was un­able to off­set profit-tak­ing and the ef­fects of a tight­en­ing of trad­ing rules.

Tokyo ended down 2.88 per­cent, or 596.20 points, at 20,109.95, Syd­ney shed 2.33 per­cent, or 123.4 points, to 5,422.5, and Seoul was 1.42 per­cent off, giv­ing back 29.77 points to 2,060.49.

Hong Kong tum­bled 3.63 per­cent at one point be­fore end­ing down 2.61 per­cent, or 696.89 points, at 25,966.98

Shang­hai, which rose 2.5 per­cent in early trad­ing, slumped by 7.58 per­cent at one point de­spite the rate cut, but ended down 3.34 per­cent, or 139.84 points, at 4,053.03.

Shen­zhen, which added 1.77 per­cent in the first few min­utes, closed 6.06 per­cent lower, giv­ing back 151.56 points to 2,351.40.

Main­land China’s strict cap­i­tal con- trols and lim­its on for­eign in­vest­ment mean its stock mar­kets are largely de­tached from other ma­jor mar­kets. Their re­cent as­cent has been driven by do­mes­tic pol­icy fac­tors.

Main­land China Drama

Chi­nese shares see­sawed from black to red af­ter the Peo­ple’s Bank of China cut rates Satur­day and low­ered the amount of cash lenders must keep in re­serve.

An­a­lysts said the an­nounce­ment was in re­sponse to dra­matic stock mar­ket falls over the pre­vi­ous two weeks, com­ing af­ter the main in­dex soared more than 150 per­cent over the past 12 months.

Shang­hai dived more than seven per­cent Fri­day — and 18.8 per­cent in the two weeks af­ter peak­ing on June 12 — as author­i­ties tight­ened rules on mar­gin trad­ing, while deal­ers are also wor­ried about stocks’ high val­u­a­tions.

Shen­zhen sank more than 20 per­cent in the two weeks to Fri­day.

“We have to bear in mind that the in­ter­est-rate cut is the fourth in eight months, so the per­ceived im­pli­ca­tion of a rate cut on eq­uity mar­kets may have waned,” said Bernard Aw, a Sin­ga­pore-based strate­gist at IG Asia.

“The mar­ket may be re­ceiv­ing mixed sig­nals on what ex­actly the (cen­tral bank) hopes to achieve with its rate cut.”

Gold fetched US$1,177.05 com­pared with US$1,174.05 late Fri­day. In other mar­kets: —- Mum­bai fell 0.60 per­cent, or 166.69 points, to end at 27,645.15. s.

— Bangkok closed down 0.45 per­cent, or 6.84 points, to 1,511.19.

— Jakarta ended down 0.82 per­cent, or 40.43 points, at 4,882.58.

— Malaysia’s key in­dex lost 1.08 per­cent, or 18.55 points, to 1,691.92.

— Sin­ga­pore fell 1.23 per­cent, or 40.72 points, to 3,280.18.

— Welling­ton sank 0.86 per­cent, or 49.63 points, to 5,705.81.

— Manila closed 0.72 per­cent lower, slip­ping 54.67 points to 7,567.38.

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