Shares edged higher in major markets and Greek debt yields rallied yesterday after the Parliament in Athens rejected the government’s presidential candidate, while crude prices tumbled after a short-lived bounce.
Greece’s Syriza party wants to wipe out a big part of the country’s debt and cancel the terms of a bailout from the European Union and International Monetary Fund that Athens needs in order to pay its bills.
Greek Prime Minister Antonis Samaras failed to get enough support for his nominee and will call a national election for January 25. Stocks in Athens plunged as much as 11.3 per cent and yields on 10-year government bonds touched their highest since September 2013.
On Wall Street, however, the S&P 500 hit yet another intraday record high, boosted by gains in utilities, consumer and bank stocks.
On Wall Street, the Dow Jones industrial average was down 4.21 points, or 0.02 per cent, at 18,049.50. The Standard & Poor’s 500 Index was up 2.73 points, or 0.13 per cent, at 2,091.50. The Nasdaq Composite Index was up 4.24 points, or 0.09 per cent, at 4,811.10.
The pan-European FTSEurofirst 300 index closed up 0.15 per cent and an MSCI gauge of major equity markets edged up 0.2 per cent.
Oil prices continued to fall after earlier rising on concern about Libyan output. Brent crude futures fell 2.8 per cent to $57.77 per barrel after hitting a high of $60.43. US crude lost 2.6 per cent to $53.32 a barrel.
Hurt in part by the sharp decline in crude prices in the past six months, Russia’s economy shrank sharply in November and the rouble resumed its slide. Western sanctions combined with lower oil to cause the first contraction in Russian GDP since the global financial crisis. The rouble fell 8.8 per cent to 58.70 per dollar.
The implications of the slide in oil on many of the larger producers that depend on crude revenues are a headwind for financial markets as the year end approaches.
US Treasuries prices rose on safety buying after the Greek parliament vote, though trading was light as many investors are away the week between the Christmas and New Year’s holidays. The benchmark 10-year US Treasury note was up 8/32, its yield at 2.2198 per cent.
The euro was unchanged against the greenback at $1.2175 . It was not far from last week’s $1.2164, which was the lowest going back to early August 2012.
Greece’s failure to elect a new president, and the resulting risk to its bailout programme “has largely been already reflected in the market positioning,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
The dollar strengthened marginally against the yen at 120.57 but lacked momentum to challenge a seven-and-a-half-year high of 121.84 hit earlier this month.