The outcome of yesterday's Greek elections has failed to provide the shot in the arm many expected this morning, as the overseas rally sparked by a New Democracy victory has faded and U.S. markets have opened lower. The reason: widespread European concerns still remain, with developments in Greece and Spain persisting as primary news this week. Here's a snapshot of the major U.S. indexes shortly after the opening bell.
|
Index |
Gain/Loss |
Gain/Loss % |
Intraday Value |
|---|---|---|---|
|
Dow Jones Industrial Average |
(67.7) | (0.5%) | 12,699 |
|
S&P 500 |
(8.1) | (0.6%) | 1,335 |
|
Nasdaq |
(17.0) | (0.6%) | 2,855 |
Source: Yahoo! Finance.
Greece
The truth of today's news is that the debt crisis is far from over in Greece, and worries over Spain continue. Despite a New Democracy victory yesterday, creating a coalition with the socialist Pasko party is next on the docket, and likely followed by the all-too-familiar process of renegotiating bailout terms. These developments will be front and center for investors worldwide, particularly for the one group most exposed to the Greek debt crisis: European banks! However, there are some significant differences in exposures across the eurozone. According to the Bank for International Settlements, French banks dwarf their neighbors in terms of Greek exposure, with loans of over 40 billion euros, well ahead of No. 2 Germany (at about €13 billion). According to some estimates, Greek debt losses for French bank Credit Agricole could be as high as 5 billion euros through their Greek subsidiary, Emporiki Bank.
Spain
Many are looking to Spain as the proverbial next shoe to drop in the European crisis. While its public-debt-to-GDP ratio is significantly lower than Greece, the situation is anything but stable. Government bond yields have recently hit record highs, the country's unemployment rate is a staggering 24%, and the banking sector is reeling from the burst of its own property bubble. New data out this morning on Spanish loan performance hasn't helped matters, either, as the percentage of loans more than 90 days delinquent has risen to 8.7%, an 18-year high. In early trading, shares of Banco Santander
Opportunity in chaos
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