European Markets Remain Under Pressure as Greek Developments Awaited – Wall Street Journal

People wait in line at an automated teller machine at a Piraeus Bank bank branch in Athens, Greece, on Monday. Greece has shut its banks for six days and imposed capital controls.

European markets remained under pressure Tuesday, as investors cautiously awaited new developments in the Greek debt crisis.

Stocks and bonds fell and the euro declined against the U.S. dollar, but most of the moves were smaller than those suffered a day earlier.

On Monday, equities and bonds slumped following a tumultuous weekend, which saw Athens announcing a referendum this Sunday on whether to accept the terms that creditors are offering in return for more bailout funds.

Greece subsequently shut down its banking system for six days as the nation’s central bank moved to impose controls to prevent money from leaving the country.

On Tuesday, Greece asked for a new bailout before its current one expires and it defaults on a payment to the International Monetary Fund. But many traders and investors said they were hesitant to make big bets until there is meaningful news or progress toward a deal, or until Sunday’s vote.

“We are waiting and seeing and we will only trade ahead of Sunday if we get a very strong signal or news,” said Wouter Sturkenboom, an investment strategist at Russell Investments, which has around $272 billion in assets under management.

The Stoxx Europe 600 ended the session 1.3% lower, having on Monday recorded a 2.7% loss—its largest single-day percentage decline since October.

Italy’s FTSE MIB and Spain’s IBEX—two indexes that suffered particularly sharp falls Monday—ended 0.5% and 0.8% lower, respectively.

Greek bond yields surged anew, but elsewhere in debt markets moves were limited. Yields on German 10-year government bonds were broadly steady at 0.76% in late European trade. Yields fall as bond prices rise.

Spanish and Italian bonds recovered slightly after Monday’s losses.

Earlier Tuesday, the Luxembourg Bourse announced that it had suspended trading of bonds issued by Greece’s biggest banks until further notice. It has also suspended trading in sovereign bonds and debt issued by Greek national railway company Hellenic Railways.

Bond trading platform Tradeweb said it had blocked trading in a number of Greek government bonds after a notification from the U.K. regulator.

Traders said turnover in Greek government debt has ground almost to a halt this week. Greece’s stock market will remain closed this week along with the country’s banks.

Greece on Monday said it would default on a €1.55 billion ($1.73 billion) International Monetary Fund payment due Tuesday—the day its current bailout program expires—though many investors said they had expected this.


“This is clearly now a fast-moving situation and it is still unclear as to how it will play out,” said Gary Jenkins, a credit strategist at London-based asset manager LNG Capital.

“The situation is fluid, headline-driven and subject to changes in direction,” said Tom Levinson, a strategist at Sberbank


For the time being, the Greek situation appears to be in something of a “holding pattern” said Simon Derrick, chief market strategist at BNY Mellon.

The euro was 0.6% lower Tuesday against the dollar, at $1.115.

Brent crude was 1.9% higher at $63.18 a barrel. Gold lost 0.9% to trade around $1,168.10 a troy ounce.

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