June 2015 – ECONOMIC NEWS – U.S. equity markets posted their biggest selloff of the year Monday amid the ongoing crisis in Greece as investors weigh the possibility of the nation’s exit from the eurozone. The Dow Jones Industrial Average plunged 350 points, or 1.95% to 17596. The S&P 500 shed 43.9 points, or 2.09% to 2057, while the Nasdaq Composite dropped 122 points, or 2.4% to 4958. Both the Dow and S&P 500 slipped into negative territory year-to-date with Monday’s selloff. All ten S&P 500 sectors were in the red led by a steep drop in banks and brokers. Greece’s financial system teetered on the brink of collapse, hurtling Monday toward a potential exit from the eurozone after weeks of negotiations between the nation and its creditors failed to yield any result.
Fears that Greece’s troubles could spread through the global financial system shook markets on Monday, driving U.S. stocks to their worst day of the year. U.S. stock markets lost $900 billion of value in a single day because of panic around Greece’s impending default on a $1.8 billion loan to the IMF tomorrow. Investors fled from stocks in Europe and the U.S. and retreated to the safety of government bonds.
The closures came after reforms-for-financial aid talks between Greece and its creditors broke down and the European Central Bank capped emergency funding to Greek banks on Sunday. Greek Prime Minister Alexis Tsipras has also called a referendum on July 5, in which Greeks will vote on whether to accept the rescue package previous offered by Athens’ international bailout supervisors, which is contingent on austerity measures. “In the absence of a sudden dramatic turn of events towards reconciliation between the Greek government and its creditors, it is difficult to see how it will be able to repay the European Central Bank on July 20, whatever the outcome of the coming weekend’s referendum,” said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, in a research note on Monday.
The developments in Greece wreaked havoc on global markets, with stock markets in France and Germany falling over 4 percent. Japan’s Nikkei closed down 2.9 percent. The Shanghai Composite also closed 3.3 percent lower despite initial attempts at gains following the central bank’s rate cut over the weekend. –NASDAQ, NBC