Market commentary: Greek crisis appears to deepen yet stocks opened higher

Running out of options to keep his country afloat, Greek Prime Minister Alexis Tsipras ordered local governments to move their funds to the central bank. With negotiations over bailout aid deadlocked, Tsipras needs the cash for salaries, pensions and a repayment to the International Monetary Fund. 

Greek bonds declined after the move, pushing three-year yields to the highest since the nation’s debt restructuring in 2012. The decree to confiscate reserves now held in commercial banks and transfer them to the central bank is said to raise about 2 billion euros.

A default on the country’s 313 billion euros of obligations and a euro exit would be traumatic for the currency area and plunge Greece into a major crisis. Credit-default swaps suggested about an 81 percent chance of Greece being unable to repay its debt in five years, compared with about 67 percent at the start of March.

European leaders want Greece to do more to revamp its debt- burdened economy, with progress to be reviewed on April 24 in Riga, Latvia, when finance ministers from the currency bloc meet.

European Commission Vice President Valdis Dombrovskis said in an interview in Washington that creditors might need to wait until mid-May to see what Greece can deliver.

Greek officials remained defiant over the weekend, saying the government won’t betray its electoral promises and worsen the pain that came from previous austerity measures. 

Officials are accusing its’ various creditors of wanting to “blackmail” Greece into adopting measures that would hurt the working class; thus going against the mandate by which they were elected.

US, European stocks rebound

U.S. stocks rebounded from the worst slide in three weeks, while commodity producers led European equities higher on speculation Chinese policy makers will take more steps to support growth. International Business Machines Corp. jumped 3.42 percent after reporting its first quarter earnings, as the Nasdaq 100 Index rallied the most in a month. The Stoxx Europe 600 Index climbed 0.8 percent after its worst week of the year.

Facebook Inc. and Microsoft Corp. report their first quarter results later this week. China, the world’s biggest consumer of energy and industrial metals, lowered the amount of cash lenders must set aside as reserves by the most since 2008 to support the economy amid the slowest expansion in six years.

Among U.S. shares moving Monday, Morgan Stanley added 1.3 percent after reporting the highest adjusted revenue in more than five years, although paring some of the gains toward the end of the session. Hasbro Inc. jumped 12.55 percent as the toymaker posted better-than-estimated quarterly results. Royal Caribbean Cruises Ltd. slumped 8 percent as the company cut its forecast for the full year.

Technology shares in the S&P 500 closed up 0.92 percent, with Apple Inc., Microsoft and Facebook rising at least 2 percent.  Miners posted the best performance among 19 industry groups in the Stoxx 600, which has climbed 19 percent this year. BHP Billiton Ltd. and Rio Tinto Group gained at least 2.4 percent.

This article was issued by Simon Psaila Trader/Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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