Stocks from developed nations to emerging markets tumbled after a
selloff in Chinese equities sparked a rout in commodities. Investors
sought the relative safety of the dollar and Treasuries as Greek debt
talks continued.
The Standard & Poor’s 500 Index lost 0.9 percent at 11:11 a.m. in New York and the Stoxx Europe 600 Index fell 1.3 percent. The MSCI Emerging Markets Index sank 1.8 percent as commodities from oil to industrial metals dropped. U.S. traded Chinese equities extended their plunge to 21 percent this year. The yield on 10-year Treasuries slid nine basis points to 2.20 percent. The euro weakened to a five-week low.
Chinese shares traded in Hong Kong entered a bear market even as the government moved to stem the rout. The drop fueled concern demand for commodities will weaken. Uncertainty prevailed Tuesday in Greece’s debt crisis, with Greek Prime Minister Alexis Tsipras in Brussels for what could be a last chance to secure a rescue from European leaders and keep his country in the euro.
“Just when we are prepared for a better economy and higher rates we find ourselves focusing on global macro stories,” said Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC. “It’s not all Greece, it’s China, too, and when you combine the two, then you get what we have today.”
The Bloomberg US-China Equity Index fell 8.4 percent, the steepest drop in four years. Alibaba Group Holding Ltd. fell to the lowest since its initial public offering, while JD.com Inc. sank a record 9.4 percent.
“We’re in uncharted waters,” said Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego. “Greece went back to the euro leaders and they had nothing, so we’re back to the drawing board. This Greek news is giving investors a pretty good opportunity to sell.”
Treasuries rose for a third day and headed for the longest winning streak in almost 12 weeks, with the 10-year yield touching the lowest level in more than a month. European bonds strengthened, with bunds leading gains. The yield on Portugal’s bonds fell four basis points and Italy’s slid 10 basis points.
Stocks in the region extended losses after markets including Spain and France entered a correction on Monday. Greece’s stock market will remain closed on Tuesday and Wednesday after a bank holiday was extended.
The euro fell 1.2 percent to $1.0926, more than double Monday’s decline, and touched $1.0916, the weakest level since June 2. It slipped another 1.2 percent to 133.85 yen.
The Bloomberg Dollar Spot Index rose for a third day, adding 0.7 percent and reaching the highest since June 5. The U.S. currency had its biggest gains versus currencies of commodity-producing nations, climbing at least 1 percent versus the Norwegian krone, as well as Australia’s and New Zealand’s currencies.
Gold declined to a 15-week low as the strengthening dollar cut demand for the metal as a store of value. Futures for August delivery dropped 1.9 percent to $1,150.80 an ounce in New York.
The MSCI Emerging Markets Index sank for a fifth day of losses and headed for the lowest close this year. The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong slid 3.3 percent, extending declines from its May 26 peak to 20 percent to meet the common definition of a bear market. The Shanghai Composite Index lost 1.3 percent amid a record drop in margin bets.
Sales of mainland shares through the Shanghai-Hong Kong exchange link swelled to an all-time high on Monday, while dual-listed shares in Hong Kong fell by the most since at least 2006 versus mainland counterparts.
The Standard & Poor’s 500 Index lost 0.9 percent at 11:11 a.m. in New York and the Stoxx Europe 600 Index fell 1.3 percent. The MSCI Emerging Markets Index sank 1.8 percent as commodities from oil to industrial metals dropped. U.S. traded Chinese equities extended their plunge to 21 percent this year. The yield on 10-year Treasuries slid nine basis points to 2.20 percent. The euro weakened to a five-week low.
Chinese shares traded in Hong Kong entered a bear market even as the government moved to stem the rout. The drop fueled concern demand for commodities will weaken. Uncertainty prevailed Tuesday in Greece’s debt crisis, with Greek Prime Minister Alexis Tsipras in Brussels for what could be a last chance to secure a rescue from European leaders and keep his country in the euro.
“Just when we are prepared for a better economy and higher rates we find ourselves focusing on global macro stories,” said Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC. “It’s not all Greece, it’s China, too, and when you combine the two, then you get what we have today.”
U.S. Equities
Selling in U.S. equities accelerated after the S&P 500 fell below its average price for the past 200 days. The index has fallen 3.7 percent from its May 21 record as the turmoil in Greece stole attention from economic data and the Federal Reserve. Minutes from the Fed’s June meeting due Wednesday may offer clues on the health of the economy.The Bloomberg US-China Equity Index fell 8.4 percent, the steepest drop in four years. Alibaba Group Holding Ltd. fell to the lowest since its initial public offering, while JD.com Inc. sank a record 9.4 percent.
“We’re in uncharted waters,” said Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego. “Greece went back to the euro leaders and they had nothing, so we’re back to the drawing board. This Greek news is giving investors a pretty good opportunity to sell.”
Treasuries rose for a third day and headed for the longest winning streak in almost 12 weeks, with the 10-year yield touching the lowest level in more than a month. European bonds strengthened, with bunds leading gains. The yield on Portugal’s bonds fell four basis points and Italy’s slid 10 basis points.
Stocks in the region extended losses after markets including Spain and France entered a correction on Monday. Greece’s stock market will remain closed on Tuesday and Wednesday after a bank holiday was extended.
Greek Talks
Greek voters rejected austerity measures on Sunday, setting up a showdown with creditors as the nation’s financial crisis worsens. The European Central Bank maintained the level of Emergency Liquidity Assistance available to Greece on Monday, while tightening terms related to collateral.The euro fell 1.2 percent to $1.0926, more than double Monday’s decline, and touched $1.0916, the weakest level since June 2. It slipped another 1.2 percent to 133.85 yen.
The Bloomberg Dollar Spot Index rose for a third day, adding 0.7 percent and reaching the highest since June 5. The U.S. currency had its biggest gains versus currencies of commodity-producing nations, climbing at least 1 percent versus the Norwegian krone, as well as Australia’s and New Zealand’s currencies.
Commodities Rout
Industrial metals dropped, with copper extending its biggest decline since January. The metal slipped to a five-month low, a day after an index of metals traded on the London Metal Exchange touched the lowest since 2009. Nickel dropped 2.4 percent. Iron ore dropped below $50 a ton for the first time since April.Gold declined to a 15-week low as the strengthening dollar cut demand for the metal as a store of value. Futures for August delivery dropped 1.9 percent to $1,150.80 an ounce in New York.
The MSCI Emerging Markets Index sank for a fifth day of losses and headed for the lowest close this year. The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong slid 3.3 percent, extending declines from its May 26 peak to 20 percent to meet the common definition of a bear market. The Shanghai Composite Index lost 1.3 percent amid a record drop in margin bets.
Sales of mainland shares through the Shanghai-Hong Kong exchange link swelled to an all-time high on Monday, while dual-listed shares in Hong Kong fell by the most since at least 2006 versus mainland counterparts.
