British and European markets took a dive during Monday's trading session, after weak market performance in Asia. Meanwhile, North American markets are also faring poorly as they continue trading past the U.K. market close.
Joshua Raymond, chief market strategist at City Index, explains why the markets are slumping: “Whilst a deal is still expected to be achieved between Greece and [its private debt holders], the mere fact that talks remain at a point of disparity keeps it an issue lingering in the background and the clock is ticking ever closer to March's Greek [bond] redemptions.”
At the same time, “EU leaders [are] gathering for a new EU summit, which historically transpires to keep the markets somewhat edgy and headline driven,” says Raymond. This could mean more market volatility in the days ahead.
At the start of the trading day in Europe, the FTSE 100 lost nearly 1% of its value, while its peers in Europe - the DAX and CAC Indices - also sustained comparable losses.
By the end of the day, the FTSE 100 Index had fallen by 1.1%, or 62 points. It closed the session at 5,671. The FTSE 250 Index slipped even further, losing 1.5%, or 161 points, to close at 10.694.
Weakness in banks and commodity stocks dragged Britain's markets lower. Credit Suisse contributed to the drop in financial shares after it reduced its recommendation on the entire European banking sector to "underweight." Barclays (BARC) shares fell by 4.2%, while Lloyds Banking Group (LLOY) shed 4.1%.
Energy company, Essar Energy (ESSR), was the biggest loser during the trading session, falling by 5.7%. Essar shares have lost over 25% of their value since the middle of January, after a court ruling by India's Supreme Court stated that Essar’s subsidiary, Essar Oil, will no longer be able to defer payment of sales tax. That means the subsidiary may have to pay over $1 billion to the Indian government this year, rather than deferring the payment until 2021.
