Global equities slide as Greece veers towards default; bonds up

Oil hits three-week low; gold steadies

NEW YORK, June 29, (Agencies): US stocks added to a global selloff on Monday as markets digested news of capital controls in Greece and the country veered toward a default on its debt, while the euro recouped some of its earlier losses against the dollar.

Talks between Athens and its creditors broke down over the weekend after Prime Minister Alexis Tsipras called a surprise referendum on the austerity cuts in the aid package proposed by Greece’s creditors. Tsipras late Sunday announced moves to prevent a collapse of the banking system.

After an initial wave of selling, European stocks and the euro recovered some ground as investors judged that the Greek crisis still had some way to run. On Wall Street, benchmark S&P 500 futures fell as much as 2 percent late on Sunday, but the index fell less than 1 percent in early Monday trading.

The CBOE Volatility index, a measure of the premium traders are willing to pay for protection against a drop in the S&P 500, jumped as much as 19.1 percent to 16.7 points, the highest in three months. It was last up 13.7 percent at 15.94, not far from its historic average.

The session’s market moves in Europe were considerable, but paled in comparison to the market impact of the financial crisis of 2008 or the last major round of Greek-spurred turmoil in 2011-12.

The pan-European FTSEurofirst 300 .FTEU3 index shed 1.7 percent, the most in a month.

It earlier fell as much as 3.2 percent. Greek banks and the stock market were closed on Monday and were expected to remain closed until after the July 5 referendum.

The Global X FTSE Greece exchangetraded fund (ETF) , which tracks the Athens stock market, was down 15.9 percent from its Friday closing price. Euro zone banks fell 4.3 percent in value.

Greece’s bailout program expires on Tuesday.

Adding to the gloomy backdrop, China shares dived another 3.3 percent, bringing the losses in the past two weeks to more than 20 percent, with central bank cuts in interest and reserve rates on Saturday failing to calm jittery investors.

The euro fell overnight to as low as $1.0953, off 2 percent versus the US currency, but recouped much of those losses to trade down just 0.4 percent at $1.1118.

The euro received support as the Swiss National Bank confirmed it had intervened to counter gains for the franc against the bloc’s single currency.

The yen strengthened 0.8 percent versus the greenback, giving up some of the gains that were as much as 1.4 percent.

Spot gold pared a gain of more than 1 percent on the day to trade mostly unchanged near $1,175 an ounce.

Brent crude was down 1.8 percent at $62.15 a barrel and US crude fell 1.7 percent $58.64 a barrel after having hit

$58.04, a three-week low.

US

US stocks extended their losses in heavy trading on Monday, adding to a global selloff, after a collapse in Greek bailout talks intensified fears that the country could be the first to exit the euro zone.

All three major indexes fell more than 1 percent on the same day for the first time in more than a month as investors dropped riskier assets such as equities and commodities.

Volatility rose sharply as nine of the 10 main S&P sectors retreated. The only group to rise was utilities, considered a defensive play.

In Europe, the blue-chip Euro STOXX 50 index suffered its biggest one-day fall since 2011.

The European Central Bank froze funding to Greek banks, forcing Athens to shut banks for a week to keep them from collapsing.

Greece faces default if it does not repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund on Tuesday.

While the Greek economy is small, and US corporations have limited exposure to the country, investors are concerned about the fallout across Europe if the country exits the euro zone.

Investors have been keeping a close eye on data to see if the US economy has recovered from a slow start at the beginning of the year. The Federal Reserve has said it will raise rates when it sees a sustained rebound in the economy.

The CBOE Volatility index, a measure of the premium traders are willing to pay for protection against a drop in the S&P 500, jumped as much as 23.18 percent to 17.26 points, its highest in more than three months.

At 12:06 pm EDT (1606 GMT) the Dow Jones industrial average was down 198.65 points, or 1.11 percent, at 17,748.03, the S&P 500 was down 23.56 points, or 1.12 percent, at 2,077.93 and the Nasdaq Composite was down 66.14 points, or 1.3 percent, at 5,014.37.

The financials moved into negative territory for the year and weighed down the S&P 500 with a 1.5 percent decline. Bank of America, down 2.5 percent, was the biggest drag on the financial index.

Goldman Sachs weighed the most on the Dow with a 1.8 percent decline.

Seres Therapeutics’ shares fell 19 percent to $41.60 after an 86 percent rise in its market debut on Friday, making it the biggest loser on the Nasdaq.

Ameriana Bancorp shares rose 36 percent at $21.32 after First Merchants and Ameriana agreed to merge in a $68.8 million deal. The stock was the biggest percentage gainer on the Nasdaq.

Assured Guaranty and MBIA Inc fell more than 12 percent after BTIG downgraded the insurers on concerns over Puerto Rico’s debts.

Vitae Pharmaceuticals shares fall 15.4 percent to $12.85 after company said its drug to treat type 2 diabetes in overweight patients did not meet its main goal in a mid-stage study testing it as an add-on therapy.

Declining

issues

outnumbered advancers on the NYSE by 2,570 to 476. On the Nasdaq, 2,152 issues fell and 551 advanced.

The S&P 500 index showed two new 52-week highs and 19 new lows, while the Nasdaq recorded 39 new highs and 82 new lows.

Europe

Europe’s main markets closed sharply lower on Monday over the escalating Greek crisis, with the eurozone’s periphery nations taking the biggest hit.

Frankfurt’s DAX 30 lost 3.56 percent to 11,083.20 points and the CAC 40 in Paris shed 3.74 percent to 4,869.82 points while London’s benchmark FTSE 100 index of top companies fell 1.97 percent to 6,620.48 points.

Eurozone nations with high debt burdens were hardest hit, with both Lisbon and Milan plunging more than 5 percent and Madrid slumping 4.56 percent.

UK

Britain’s top share index fell sharply on Monday, with investor sentiment punctured by Greece’s deepening debt crisis following the breakdown of talks with creditors and Athens’ imposition of capital controls. Travel and leisure stocks were hit hard by events in Greece, a popular holiday destination for Europeans, and news that tour companies were evacuating thousands of holidaymakers from Tunisia after a gunman killed dozens of people at a beach hotel on Friday.

The blue-chip FTSE 100 index was down 133.22 points, or 2 percent at 6,620.48 points at the close.

It was pressured by a 2.2 percent drop in UK banking index after Greece closed its banks to check the growing strains on its crippled financial system.

Among companies evacuating tourists from Tunisia following Friday’s attack, TUI Travel shed 7.1 percent, making it the biggest FTSE 100 faller.

The firm’s Thomson and First Choice businesses said they had around 6,400 customers across the country.

Asia

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 2,351.40. In other markets: Mumbai fell 0.60 percent, or 166.69 points, to end at 27,645.15.

Hindalco Industries fell 3.55 percent to 112.80 rupees, while consumer goods major Hindustan Unilever rose 2.10 percent to 905.00 rupees.

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

Kasikorn Bank lost 2.25 percent to 195.50 baht, while Siam Cement fell 0.77 percent to 518.00 baht.

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

Indonesia-based mining firm PT United Tractors Tbk gained 4.39 percent to 20,200 rupiah, while real estate company Bumi Serpong Damai Tbk Pt slipped 4.56 percent to 1,675 rupiah.

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

Sime Darby fell 0.12 percent to 8.49 ringgit, Telekom Malaysia dipped 1.65 percent to 6.56 while RHB Capital added 0.14 percent to 7.26 ringgit.

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

DBS Bank dropped 1.07 percent to Sg$20.30 and telecom giant Singtel was unchanged at Sg$4.13.

Taipei fell 2.39 percent, or 226.47 points, to 9,236.1.

Taiwan Semiconductor Manufacturing Co shed 2.12 percent to Tw$138.5 while Hon Hai Precision Industry lost 2.32 percent to Tw$96.9.

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

Spark was down 0.71 percent at NZ$2.78 and Air New Zealand lost 2.51 percent to NZ$2.525.

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

Universal Robina Corp fell 0.25 percent to 197 pesos while Ayala Corp dropped 1.33 percent to 779 pesos.

Oil

Crude futures hit 3-week lows on Monday as Greece shut its banks and imposed capital controls, causing widespread risk aversion, while Iran looked likely to extend nuclear negotiations with the West to export more of its oil into an oversupplied market.

Brent crude futures were down $1.50 at $61.76 a barrel by 11:36 am EDT (1536 GMT). It had fallen almost $2 in European trading to its lowest since June 5.

US crude was down $1.30 to $58.33 a barrel, touching a June 9 bottom earlier.

Gold

to

Gold steadied on Monday, giving up early gains as the prospect of a Greek debt default, which hit European shares, was offset by a strengthening dollar and wariness among investors over the metal’s longer-term outlook.

Gold, which often benefits from uncertainty in the wider financial markets, initially rallied to a near one-week high at $1,186.91, but later gave up some of those gains.

Spot gold was up 0.1 percent at $1,175.86 an ounce at 1354 GMT, while US gold futures for August delivery were up $2.20 an ounce at $1,175.40.