The week opened on a down note, as escalating fears of a Greek debt pressured global equities. In Asia, Chinese markets led the declines, as the Hang Seng tumbled 2.8% and the Shanghai Composite sank 1.8%. Around the region, the Kospi dropped 1%, and the ASX 200 fell 1.6%. Japanese markets were closed for a holiday.
Selling pressure picked up steam in Europe where the CAC40 slumped 3%, the DAX fell 2.8%, and the FTSE declined 2%. Election results from Germany raised concerns that further bailout efforts might meet greater resistance. Bank shares fell more than 3%, and French banks were hit particularly hard, as BNP Paribas and Societe Generale sank 5.5% and 6.7% respectively.
US markets opened sharply lower but largely recovered as they rallied near the close on rumors of a potential deal between Greece and debt holders. The Dow fell 108 points to 11401, significantly higher than the 250 point loss hit earlier in the session. The Nasdaq outperformed, easing just .4%, and the S&P 500 declined 1%.
Netflix fell another 7.4% after announcing it would split the company’s DVD and streaming movie services into two separate companies. Goodrich shares jumped nearly 16% after United Tech announced it might make a takeover bid.
Currencies
The Dollar rallied against most major currencies, but closed well off the session highs. The Euro settled down .8% to 1.3689, after dropping down to 1.3593 in the early morning. Traders shifted out of the risk trade, sending the Australian Dollar down 1.6% to 1.0208, and the Canadian Dollar down 1.2% to .9896. The Pound and Swiss Franc both eased .6%. The Yen was a notable exception, gaining .3% to 76.54.
Economic Outlook
President Obama proposed a plan to raise taxes by $1.5 trillion in an effort to tackle the nation’s growing debt burden. The plan puts a larger burden on the rich, which is likely to meet stiff resistance in Congress.