European stocks fell on Monday as euro zone finance ministers were holding talks with Greece about the extension of the bailout program. Stoxx Euro 600 slid 0.1% after posting a 1% gain last week. Germany’s DAX 30 index fell 0.4% and the UK’s FTSE 100 index lost 0.2%. The talks on Greek bailout extension broke down after Greek delegation reused to request a six-month extension of its international bailout package, rejecting the extension proposal as "unacceptable". A draft presented by Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, effectively gave Athens an ultimatum by proposing that Athens extend and abide by its current program or the bailout would expire at the end of the month. Greek Finance Minister Yanis Varoufakis said he had been ready to sign a proposal from the European Commission by which Greece would get four to six months credit in return for a freeze on its anti-austerity policies. Greek Prime Minister Alexis Tsipras has refused to ask for an extension of the current rescue bailout program unless Greece’s lenders agree to greater leniency on debt repayments and on austerity measures. According to a senior Greek banker, Greek banks are losing 400-500 million euros every day, and JP Morgan bank estimates that at the current pace Greek banks have only 14 weeks before they run out of collateral to obtain funds from the central bank. Earlier the ECB had allowed the Greek central bank to provide emergency lending to the banks, but a failure to secure an extension could mean the imposition of capital controls. On Wednesday the European Central Bank will decide whether to maintain emergency lending to Greek banks. Market participants seemed confident a compromise would be reached as evidenced by the rise of euro against the US dollar on Monday as negotiations were under way. The single currency declined today as the talks collapsed and is trading at $1.352 within its prevailing $1.1270-$1.1534 range. Today at 10:30 CET January inflation indicators will be released in UK. Consumer Price Inflation is expected to fall to 0.4% from 0.5%. At 11:00 CET February ZEW survey results for Germany and Euro-zone will come out. After a surprise jump in the fourth quarter German GDP the tentative outlook is positive for euro.
US markets were closed on Monday for the Presidents Day holiday. US stock futures are declining today indicating a lower open for US markets. Today at 14:30 CET Empire State Manufacturing Index will be released in US. And at 16:00 CET the Housing Market Index will come out. With the housing market index forecast to record an increase over previous month’s solid reading of 57, the tentative outlook is positive for the dollar.
The Nikkei is falling today after rising to as high as 18,074.26 on Monday, the highest since July 2007. Index heavyweight stocks are falling, while exporters are mixed, with Toyota Motor Corp, Canon Inc falling and Nissan Motor Co advancing.
Oil continues to rise today as IEA warned that the rise of the Islamic State in Iraq and Syria presented a major challenge for the investment necessary to prevent an oil shortage in the next decade.
Copper is falling today on the London Metal Exchange as China reported property price data indicating new-home prices in January fell from the previous month in 64 out of 70 cities.