Stock Market Down as Greece Talks Collapsed on Sunday

Stock Market DownStock markets around the world are deep in the red as of the morning of Monday, June 15 on the news that the talks between Greece and its creditors collapsed on Sunday.

The failure in reaching an agreement this weekend caused disruptions in the markets. The Euro Stoxx 50, which tracks 50 of the largest and most liquid stocks in Europe, plunged 1.84% during Monday’s trading, with all its members dropping. The euro slipped half a percent against the dollar at $1.12.

Greek stocks tumbled on the news, losing 5.2%. The biggest losers are the Greek banks; most of them declined more than 10%. Bank stocks in Spain, Italy, and Portugal also lost significantly on the news.

North American equities are also trading lower in early trading. The Dow Jones Industrial Average extended its losses from last week and was lower for the year, with all 30 Dow components in the red.

Greece: Failing to Meet the 24-Hour Deadline

Last Thursday, the International Monetary Fund (IMF) said it had stopped bailout talks with Greece due to a lack of progress in reaching an agreement. Greece was given less than 24 hours by the IMF to come up with a serious counterproposal to end the impasse.

No agreement was reached on Sunday as the talks in Brussels ended in less than an hour. Again, Greece refused the creditors’ demand for more pension cuts and labor market reforms. Greece’s stance on the subject has been very clear. For Prime Minister Alexis Tsipras’s anti-austerity government, cutting wages and pensions make up a red line that will not be crossed.

The next event to watch as far as Greece is concerned is the euro-area finance ministers meeting in Luxembourg on June 18. This would be a make-or-break meeting, as the fate of Greece will be discussed. This might be the parties’ final attempt to bridge differences.

U.S. Stock Market

Investors will be watching shares of CVS Health Corporation (NYSE/CVS) this morning, after the company announced an agreement to buy Target Corp.’s (NYSE/TGT) pharmacy business for $1.9 billion. Shares of both companies rallied on the news in early trading, with shares of CVS and Target up 0.34% and 1.7%, respectively.

Alibaba Group Holding Limited (NYSE/BABA) is drawing attention too, announcing that it would launch an online video streaming service in China in about two months. The announcement did not bring large movements to the company’s stock price, which is down around 0.14% in morning trading.

Finally, investors are awaiting commentary from the Federal Open Markets Committee, which is scheduled to meet on Tuesday and Wednesday. Upbeat consumer sentiment and stronger economic data last week added to views that the economy is regaining momentum, fueling anxiety that the central bank will raise interest rates later this year.