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Wednesday, 20 November 2019

US stocks tumble as market digests Cyprus deal

AFP, Monday 25 Mar 2013
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US stocks tumbled Monday after a top European finance official suggested that the Cyprus bailout framework could serve as a template for other European bank crises.

At the closing bell, the Dow Jones Industrial Average was down 64.28 (0.44 percent) to 14,447.75.

The broad-based S&P 500, which had been within striking distance of an all-time high, dropped 5.20 (0.33 percent) to 1,551.69. The tech-rich Nasdaq Composite Index finished 9.70 (0.30 percent) lower at 3,235.30.

Stocks opened the day higher after the Cyprus bailout plan was sealed overnight Sunday in a 11th hour deal.

"It's good news that disaster was avoided. But the bad news is that there's a cost to it," said Art Hogan of Lazard Capital Markets.

But by midday, markets tumbled following published comments by Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers.

Dijsselbloem told the Financial Times that the costs of bank recapitalizations shouldn't fall on the public sector, but on bondholders, shareholders and, if necessary, uninsured deposit holders.

Markets across Europe and in the US fell after the remarks, which were taken to suggest a new template for banking crises in other European countries.

However, Dijsselbloem subsequently released a statement via Twitter that characterized Cyprus as a "specific" case.

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