U.S. stock market closed barely in a positive territory last night as investors remained concern about the ongoing situation in Greece. Nonetheless, the stock market was able to recover its losses from its worst day of the year, from a day earlier, when the market has its initial opportunity to react to Greek news.
There is still no solution on Greece and the only element which is certain is that the county has missed its payment to the IMF and is officially in arrears. As a result, now the question which stand is if the country will still receive its aid from the IMF. Greece was suppose to get more aid from the IMF and it was going to use this sum to pay the ECB bill which is due on the 20th of July. However, according to the IMF regulations, if the country misses its repayment, it will not receive any further aid payment from the IMF hence, Greece is in a much bigger trouble now.
Greece did try to approach the euro group at the last minute on the back of a hope that perhaps they will get some money, but all those hopes were thrashed by the officials who are not willing to lend anything to Greece unless, it commits to its reforms. The euro group president has also confirmed that Greece is already too late for any extension of its bailout terms and the next bail out program will only be discussed after the country has its results on referendum. The officials from Greek government has indicated that they can cancel the referendum if their loan request is approved. But, in reality, it is highly unlikely any of their request will be approved or considered until we get the results of this referendum.
Nonetheless, there is a euro group meeting taking place all day today and the officials will discuss how to handle the third bail out program. The Greek government has also prepared their 2 years bailout program with the euro creditors, which will help the country to meet its financial needs.
S&P has downgraded four of Greek banks after the country has missed its repayment today to selective default. Fitch, a rating agency, has also lowers the credit rating for Greece to CC. As long as the situation continues like this, these downgrades will not stop, and these agencies will continue take every thing away from Greece.
Yesterday we also had the end of month which also marks the end of quarter and there has been massive repositioning taken place as a result of this. Some of this repositioning could continue today and this add more volatility for the market.