Monday, 15 June, 2015
(Bloomberg) — European stocks fell a second day and the euro declined with Spanish bonds after talks between Greece and its creditors broke down without a deal on bailout aid. Treasuries and bunds advanced, while copper fell. The Stoxx Europe 600 Index fell 0.7 percent by 8:01 a.m. in London. The euro weakened at least 0.3 percent against the dollar and the yen, while the additional yield investors demand to hold Spain’s 10-year securities over benchmark German bunds climbed to the most since October. Futures on the U.S. equity benchmark slipped 0.2 percent, yields on 10-year Treasuries declined five basis points, and copper slid 1.4 percent to pace a drop in industrial metals. Negotiations in Brussels between Greece and its creditors fell apart after just 45 minutes on Sunday, meaning a June 18 meeting of euro-area finance ministers may now be a make-or-break session deciding whether Greece will avert default. Monetary policy also remains a focus this week, with the U.S. and Japan reviewing interest rates. Saudi Arabia is opening one of the world’s most-restricted equity markets to foreigners. “It’s a Greek effect and this week we’re going to see more contagion than we’ve seen so far,” Trevor Greetham, London-based head of multi asset at Royal London Asset Management Ltd., told Bloomberg TV. “Both sides have to agree to something here that they don’t want to agree to. So we’re going to see volatility during the week. Things are really hotting up.” The region’s common currency weakened 0.3 percent to $1.1232 and slipped as much as 0.7 percent to 138.08 yen. Volatility jumped to the highest since 2011. ‘Significant Gap’ The European Commission said Sunday that the divide between what creditors demanded and what Greece was prepared to do couldn’t be bridged. The latest failure to find a formula to unlock as much as 7.2 billion euros ($8.1 billion) in aid for Greece’s anti-austerity government was accompanied by warnings about the risk of the country’s exit from the 19-nation euro. “While some progress was made, the talks did not succeed as there remains a significant gap,” the commission said in a text message. “On this basis, further discussion will now have to take place in the Eurogroup.” Yields on Treasury notes due in a decade dropped to 2.34 percent amid demand for haven assets, while the rate on similar-maturity German bunds slipped 3 basis points to 0.8 percent. Spanish 10-year yields climbed 7 basis points to 2.32 percent. E-mini futures on the Dow Jones Industrial Average lost 0.3 percent, as did contracts on the Nasdaq 100 Index. The S&P 500 decreased 0.7 percent on Friday. The MSCI Asia Pacific Index dropped 0.5 percent as bond risk across the region rose. Chinese stocks listed in Hong Kong led losses across Asia on Monday, with the Hang Seng China Enterprises Index slumping 2.4 percent. The Shanghai Composite Index dropped 2 percent. Copper, Wheat “The stock market has priced in hopes that Greece will come to an agreement, so if that doesn’t happen, it’s going to be a really harsh situation for equities,” Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo, said by phone. “If they don’t reach an agreement, they might start moving ahead with Greece exiting the euro.” Copper in New York fell 1.4 percent, extending a fourth weekly drop. Money managers held a net-short position on the Comex last week, the first time bearish bets outnumbered bullish wagers since February, U.S. Commodity Futures Trading Commission data showed. Nickel and aluminum dropped at least 1.1 percent. Wheat futures for September delivery slipped 0.9 percent, declining for a fourth day. The U.S. government expects domestic inventories to rise to the highest level in five years and said last week that local production of the winter variety would be larger than analysts estimated. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this e-mail or any information it contains is prohibited. This information is not, and should not be construed as, a recommendation, solicitation or offer to buy or sell any securities or related financial products. This information does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive it. You are receiving this email because you are a valued client of Archr.