Markets wobble on break down of Greek bailout talks

Markets and indices

​On Wall Street on Friday, stocks fell on news of a deadlock in the bailout negotiations between Greece and its creditors. The Dow Jones Industrial Average dropped 140 points, or 0.8 per cent, to close at 17,899. The S&P 500 index fell 15 points, or 0.7 per cent, to 2,094, and the Nasdaq declined 31 points, or 0.6 per cent, to 5,051.

Asia Pacific markets traded flat on Monday with all major markets closing slightly down in response to bearish sentiment about Greece over the weekend and caution ahead of the upcoming US Fed meeting.

US markets are expected to follow Europe and Asia’s lead and open lower today following the collapse on Sunday of weekend talks between Greece and its EU and IMF creditors. The two sides failed to reach an agreement, with European Commission spokeswoman Annika Breidthardt saying on Sunday that new proposals presented by Greece were incomplete and were €2 billion (£1.29 billion) short in terms of spending cuts and economic reforms. Greek representatives said they would not give in to demands for more austerity, however Finance Minister Yanis Varoufakis ruled out Greece leaving the euro reported Reuters.

Markets will be closely watching the signals from the meeting on Thursday of EU Finance ministers with time running out for Greece to reach a deal, ahead of the end of June deadline on its current bailout program. The likelihood of a Greek default and possible exit from the EU is increasing, although market watchers are forecasting a last minute compromise to avoid such a major break-up.

Economic news

In the major economic news this week, investors are eagerly anticipating the outcome of the US Fed’s two day Federal Open Market Committee (FOMC) meeting on Wednesday for an indication on interest rates, with consensus firming for a September hike.

Company news

In US company news, gun maker Colt Defense said late on Sunday it is filing for bankruptcy, amid business execution and debt issues. The company, which dates back to the 17th century, has secured $20 million from its existing lenders and will continue operating during bankruptcy procedures. The company expects to remain in business after the restructuring, reported the Wall Street Journal.