World Markets Decline with Greece’s Debt Problems
With Greece's debt issues becoming worse, world markets are stumbling.
Last Monday, the world market stumbled as investors worried that Greece’s debt problems were worsening. European leaders pushed a decision last Friday about the next installment of the country’s bailout to October. As written by Marc Chandler, head of currency strategy at Brown Brothers Harriman: “Time is running out. The two day meeting between European finance ministers ended without substantial progress on Saturday.”
Later last Monday, EU leaders and IMF officials held a conference call to discuss what steps Greece are taking to solve its debt issues. Among them is the expansion of the European Financial Stability fund, which was created last year to facilitate low-cost loans to struggling EU members like Portugal and Ireland. Under the expansion, the fund would enable governments to buy bonds directly from banks and investors. However, many analysts state that there’s not enough money in the European Financial Stability fund to make it an effective tool.
The euro was also under pressure against the US dollar last Monday, falling to $1.36 due to “negative European sentiment.”
Signs of market queasiness spread to Wall Street, with stock futures selling off sharply. Bank of America, Goldman Sachs, and JPMorgan Chase fell to 3%; Citigroup declined to 4%; while Morgan Stanley dropped to 6%. Concerns over European debt, particularly in Greece, also weight heavily in Asian Markets, as Hang Seng dropped 2.7% and Shanghai decreased to 1.8%. Nikkei, on the other hand, was closed.
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