December 17, 2017
Wednesday, June 24, 2015

Wall St ends broadly lower on Greek debt concerns

US stocks closed lower today, dropping in a broad decline as the outcome of negotiations between Greece and its international creditors remained up in the air, prompting investors to drop riskier assets like equities.

Wall Street has lately taken its cue from the situation in Greece, which needs fresh funds to avoid defaulting on a $1.8 billion debt repayment to the IMF on June 30.

Greek Prime Minister Alexis Tsipras recently announced tax and reforms proposals, which market participants took as a sign of progress. But creditors demanded sweeping changes to the proposals today, adding fresh uncertainty to talks aimed at unlocking aid to avert a debt default next week.

The US Commerce Department said gross domestic product fell at a 0.2 percent annual rate in the January-March quarter, instead of the 0.7 percent it estimated last month.

Investors have been keeping a keen eye on economic 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 remains data-dependent and expects to raise rates when it sees a sustained rebound in the economy.

The Dow Jones industrial average fell 178 points, or 0.98 percent, to 17,966.07, the S&P 500 lost 15.62 points, or 0.74 percent, to 2,108.58 and the Nasdaq Composite dropped 37.68 points, or 0.73 percent, to 5,122.41.

In Europe, stock markets gave back some of the gains made earlier in the week as doubts returned over Greece's debt crisis and French telecoms shares slumped after Bouygues rejected a bid.

German business morale also weakened for a second straight month in June, a leading survey showed, suggesting concerns about Greece are hitting the mood in corporate boardrooms across Europe's largest economy.

The pan-European FTSEurofirst 300 index closed down 0.4 percent, while the euro zone's blue-chip Euro STOXX 50 index dropped 0.4 percent.

Athens' benchmark ATG equity index, which had risen 15 percent in the past two days, fell 1.8 percent and the Greek bank index dropped 6.6 percent after a Greek official said Prime Minister Alexis Tsipras told associates that measures proposed by his government had not been accepted by creditors.

International creditors' own counter-proposals demanded sweeping changes to tax and reform proposals, adding fresh uncertainty to talks aimed at unlocking aid to avert a debt default next week.

French telecom stocks were among the worst performers, with Bouygues falling 9 percent after the conglomerate's rejection of an offer by Altice for its telecoms arm.

Altice slid 4.8 percent, while shares in Numericable-SFR - owned by Altice - also slumped 9 percent. Shares in French rivals Orange and Iliad also weakened by between about 3 percent and 8 percent.

Bouygues' decision to turn down Altice's offer followed opposition from French President Francois Hollande's Socialist government which had expressed concern over the deal, saying it could be bad for jobs, consumers and investment.

The Athens' ATG is down about 6 percent since the start of 2015 but the FTSEurofirst remains up by about 16 percent, since economic stimulus measures from the European Central Bank (ECB) have cushioned the impact of Greece on European markets.

Some brokers and investors remain confident Greece will remain in the euro zone, despite persistent concerns over the country's debts.

Credit Suisse strategists increased the size of their "overweight" position in European equities and were confident a deal could be reached on Greece.
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