Equities slide ahead of pivotal weekend for Greece

Stock markets in Europe and around the world headed south on Friday June 26th, as investors sought to reposition themselves ahead of a pivotal weekend regarding the Greek debt crisis.

Germany’s DAX declined more than 0.3 per cent in Friday’s morning session. The French CAC 40 lost over 0.3 per cent, and the Euro Stoxx 50 index was nearly 0.5 per cent lower. Meanwhile, the UK’s FTSE-100 was nearly one per cent down by midday.

Negotiations collapsed once again on Thursday and talks are due to resume again on Saturday. Greece has until Tuesday June 30th to repay the International Monetary Fund the €1.6 billion it owes, but Austrian finance minister Hans Jörg Schelling stated that Greece’s final deadline to reach an agreement is Sunday June 28th.

“By the time the markets reopen next week, Greece may have either secured a deal or accepted default to the IMF,” said Craig Erlam, senior market analyst at FX firm OANDA, who added that he expects to see investors preparing for “fireworks” over the weekend.

However, the euro remained stuck in a tight range on Friday, where it’s lingered since Tuesday’s decline. Over the course of the week, the single currency is down around 1.2 per cent versus the US dollar.

The drama surrounding Greece filtered into Asian markets overnight. Stocks in China were pressured lower by the developments, which were also exacerbated by indications that the recent trend higher could be reversing. 

The Shanghai Composite Index tumbled around 7.4 per cent in its biggest daily drop since January. Meanwhile, the key CSI300 index collapsed by 7.9 per cent in its worst daily performance in seven years.

Despite this, China indicated that it was confident that the Greek debt talks could still reach a positive conclusion.

“We have full confidence in how that will progress. China would like to see Greece remain in the eurozone and appreciates the relevant parties’ efforts in this regard,” said vice foreign minister Wang Chao to a news conference.

“We believe that the eurozone can, via the efforts of all parties, appropriately deal with the situation.”

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