Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that European and Australian stocks fell sharply again overnight on fears that Greece is about to default on its sovereign debt.
European stocks fell more than 3%, with France's CAC falling 4% and the Europe-wide DJStoxx 50 index down 3.8%. Australian stocks fell 3.7% yesterday and the Australian dollar was weak overnight, given it has proved something of a bellwether for risk in the global economy.
Greece announced plans for an emergency and temporary property tax of 10 euros per square meter to be paid with power bills as it desperately tries to fend off default. Greece is expected to run out of money by October if it cannot win the agreement of Germany to a fresh bailout payment.
Germany's Finance Minister warned last week Germany may block the payout given it lacks confidence about Greece's ability to dig itself out from under the debt. Greece's economy contracted 7% in the first quarter from a year ago and a 'troika' team of inspectors left Greece in a hurry last week because they doubted Greece could meet its deficit and growth targets. See more here at The Telegraph.
However, US stocks rallied more than 2% in the last two hours of trade after an FT report that Italy had won assurances from a big Chinese investor that it would buy Italian government bonds. The Dow rose 230 points from its lows in the last two hours of trade to close up 56 points or 0.5%. See more here at Bloomberg.
Meanwhile, French stocks took a hammering. Societe Generale announced it would free up 4 billion euros through asset sales and job cuts. It has 900 million euros of Greek bonds and up to 4.3 billion euros worth of Italian and PIGS bonds. Its shares have fallen 60% this year and closed down another 8% overnight. See more here at Bloomberg on Societe Generale's plan.
Also, Bank of America announced 30,000 job losses to cut US$5 billion of costs, but investors who have slashed its shares by 50% this year and expect Bank of America will have to raise US$50 billion in capital in coming years were underwhelmed. See more here at Reuters.
In Britain, the government has announced the ringfencing of customer deposits and small business lending from investment banking in a move designed to reduce the risks of investment banking blowups spreading to the 'real economy'. The move is expected to cost banks 7 billion pounds. See more here at The Telegraph.
The New Zealand dollar remained firm just over 82.2 USc, but was stronger against a weak Australian dollar at around 80 Australian cents. See more here at Bloomberg on the weak Australian dollar.
(Updated with links)
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