Financial markets were tense today as investors awaited a vote in Cyprus on a contentious plan to raid bank deposits to help fund the country’s bailout.
Yesterday, trading was extremely choppy, particularly in Europe, as investors fretted over an agreement between
cash-strapped Cyprus and international lenders to seize a percentage of deposits in the country’s banks.
A vote on the seizures has been scheduled for later today, although it could be delayed again if the government
does not secure the necessary support.
If the bill isn’t passed, Cyprus faces bankruptcy and a potential exit from the euro. That’s a clear concern for
markets as is the expected turmoil the country will face when banks reopen on Thursday. Depositors around Europe are watching developments closely now that the taboo of raiding deposits has been violated.
The underlying tone of the market is set to stay jittery with investors unnerved about the potential loss of trust between banks and small depositors,” said Jane Foley, an analyst at Rabobank International.
In Europe, the FTSE 100 index of leading British shares was up 0.1 percent at 6,464 while Germany’s DAX fell 0.3
percent to 7,985. The CAC-40 in France was 0.6 percent lower at 3,801.
The euro steadied after falling yesterday to its lowest level against the dollar in 2013. It was trading flat at USD 1.2938. Oil prices were largely unchanged too, with the benchmark New York rate down a cent at USD 94.10 a barrel.
In the US, the Dow Jones industrial average was up 0.2 percent at 14,482 while the broader S&P 500 index rose the
same rate to 1,555.
The focus the rest of the day will likely center on developments in Nicosia, the Cypriot capital.
If this goes as scheduled, it will be well into the U.S. trading day before we get a result, plus the rather critical direction this will bring for stocks,” said Fawad Razaqzada, market strategist at GFT Markets.
Cypriot officials today proposed tweaking the seizures plan to spare small account holders.
Earlier, benchmarks in Asia were mostly higher. Japan’s Nikkei 225 index jumped 2 percent to close at 12,468.23 as the yen dropped against the dollar.
Hong Kong’s Hang Seng shed morning gains to fall 0.2 percent to 22,041.86. South Korea’s Kospi rose 0.5 percent to 1,978.56. Benchmarks in Singapore, Taiwan and Indonesia were also higher, while Thailand and the Philippines dropped.
After opening higher, Australia’s S&P/ASX 200 reversed course and fell 0.5 percent to close at 4,992.20.
—————– (AP)