The euro fell against other major currencies, US Treasury yields fell and global equity markets were little changed yesterday, as worries that Greece may soon default on its debt drove investors to safe-haven assets.
Trading in European markets remained calm as investors hoped an emergency meeting of eurozone leaders next week would allow Greece to avoid default later this month on 1.6 billion euros in debt repayments to the International Monetary Fund.
The subdued reaction to the Greek crisis in recent weeks supports a belief by some market participants that the exposure of Europe’s private sector to Greece is minimal and a default or the nation’s possible exit from the eurozone may have little impact on the other economies.
Greek shares, which have slumped 17 per cent this year, rose 0.57 per cent, even though talks collapsed late on Thursday.
The euro fell 0.26 per cent against the dollar, and remained within recent ranges. Major European stock markets rose, with the exception of Germany.
But the dollar and Treasury prices rose, a sign some investors were seeking safety in these assets while Greeks pulled more than €1 billion out of their banks in a single day, banking sources said yesterday.
“Right now what the market has priced in is a reasonably positive outcome, one that would delay any default, but the markets are still nervous and that’s what we’re seeing in Treasuries right now,” said Millan Mulraine, deputy head of US strategy at TD Securities in New York.
Benchmark 10-year Treasury notes were last up 21/32 in price to yield 2.755 per cent.
The dollar index was up 0.22 per cent after touching its lowest in a month on Thursday. It was down 0.17 per cent against the yen after earlier trading higher.
“Greece remains highly combustible, and that’s a recipe for dollar strength and risk aversion,” said Richard Franulovich, senior currency strategist at Westpac in New York.
Stocks on Wall Street fell, but the key indexes were still on track for their strongest performance in about two months.
The Dow Jones industrial average fell 31.65 points, or 0.17 per cent, to 18,084.19. The S&P 500 slid 2.85 points, or 0.13 per cent, to 2,118.39 and the Nasdaq Composite lost 4.15 points, or 0.08 per cent, to 5,128.80.
In Europe, the pan-regional FTSEurofirst 300 index rose 0.51 per cent to 1,532.26, but Germany’s DAX fell 0.32 per cent.
MSCI’s all-country stock index fell 0.07 per cent.
Oil fell towards $63 a barrel as concern over Greece and a forecast that US shale oil output would keep growing this year countered signs of a pickup in demand.
Brent crude for August dropped $1.62 to $62.64, while US crude for July was down $1.10 at $59.35.