Stalled Greek debt talks send markets lower; Dow suffered triple-digit loss | iNFOnews | Thompson-Okanagan's News Source

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Stalled Greek debt talks send markets lower; Dow suffered triple-digit loss

June 12, 2015 - 1:48 PM

TORONTO - Stock markets on both sides of the Atlantic turned solidly lower Friday as renewed fears over a possible Greek debt default and its knock-on effects on the euro and the world economy sent traders scrambling for the exits.

In Toronto, the S&P/TSX composite index closed down 89.73 points at 14,741.15, with energy and financial issues among the leading decliners as benchmark oil once again fell below US$60 a barrel.

The loonie, meanwhile, was off 0.22 of a U.S. cent at 81.25 cents as the American greenback strengthened.

The July crude contract shed 81 cents to US$59.96 a barrel on the New York Mercantile Exchange, while August gold lost early gains and was down $1.20 at US$1,179.20 an ounce.

In New York, markets gave back a big chunk of their advance over the previous two sessions, with the Dow Jones industrial average suffering a triple-digit loss, down 140.53 points at 17,898.84. The Nasdaq index fell 31.41 points to 5,051.10, while the S&P 500 finished 14.75 points lower at 2,094.11.

The decline, which followed similar setbacks on most European bourses, came after an unexpected decision late Thursday by the International Monetary Fund to walk out of the debt negotiations with Greece.

The announcement by the IMF, which cited lack of progress in the talks, heightened concerns that Athens may default on its debts when its 240-billion-euro bailout expires June 30. That in turn could force it out of the euro.

Greece said Friday that it would present new proposals over the weekend in an attempt to breathe life into stalled talks, but confirmation didn't come until after the close of markets in Europe.

The main index in Athens suffered the most, down 5.9 per cent, but other indexes were also sharply lower, with Germany's DAX losing 1.2 per cent, the CAC-40 in France off 1.4 per cent and Britain's FTSE 100 down one per cent.

Ninh Chung, head of investment strategy at SVB Asset Management, said such sharp turns on the markets are likely to continue until Greece and its creditors reach a deal.

"There had been optimism over Greece (over the past week) and now it seems like we've had a complete 180," Chung told The Associated Press.

In economic news, the U.S. Labor Department said that prices at the wholesale level rose 0.05 per cent in May, the most in almost three years. But outside of increases in volatile food and energy costs, core inflation remained moderate at 0.1 per cent.

Next week, in addition to the Greek debt talks, traders will have a number important economic data to consider, beginning Monday with Statistics Canada's monthly survey of manufacturing for April and U.S. industrial production for May.

On Tuesday, investors will also be looking to the start of a two-day meeting of the U.S. Federal Reserve for clues as to the direction of interest rates. In Canada the major focus will be on Friday's release of retail sales figures for April and the consumer price index for May.

News from © The Canadian Press, 2015
The Canadian Press

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