THE WALL STREET JOURNAL: Europe's hopes of containing Greece's credit crisis dimmed as the country's debt woes spread to Portugal, sparking a selloff in markets across the globe and testing the European Union's ability to protect its common currency.
The euro tumbled to its lowest point in a year against the dollar after Standard & Poor's Ratings Services cut Portugal's credit rating two notches and downgraded Greece's debt to "junk" territory, a first for a euro-zone member. The move is bound to worsen Greece's already dire fiscal situation and hamper a recovery. The news sent the bond yields in both countries soaring, a sign of distress.
The Dow Jones Industrial Average fell 213.04 points, or 1.9%, to 10991.99, suffering its worst decline in both point and percentage terms since Feb. 4. The pan-European Stoxx Europe 600 index tumbled 3.1%. As investors opted for the safety of bonds, the yield on Germany's 10-year benchmark was pushed down to 2.99%, moving below 3% for the first time in more than a year. Yields on U.S. Treasurys also dropped as investors bought.
Asian stock markets tumbled in early trading Wednesday on renewed worries about Greece's problems, with Japan's Nikkei 225 stock average shedding 2.8%.
The force of the market reaction to the downgrades suggests that the EU's fraught, months-long effort to stem Greece's debt crisis has all but failed. Portugal's stagnant economy has been viewed as among the weakest in the euro zone, although its deficit and debt levels aren't as high as Greece's. The debt rating downgrade on Tuesday, to A-minus from A-plus, fueled concerns that Portugal is on the same trajectory as its southern neighbor, despite its more solid fiscal position.
Greece's own turmoil was triggered in part by a similar ratings downgrade in December amid growing concerns about its debt. >>> Matthew Karnitschnig, Stephen Fidler and Tom Lauricella | Tuesday, April 27, 2010
TIMES ONLINE: ‘Greece infection’ spreads as stricken nation’s debt is rated junk: Greece plunged deeper into financial turmoil last night after its government bonds were rated as junk by financial markets. The Portuguese government debt also took a hammering after panic spread that a Mediterranean virus of insolvency and bad debts would infect the rest of Europe. >>> Carl Mortished and David Wighton | Wednesday, April 28, 2010
THE TELEGRAPH: Greece acts to stop speculators as debt crisis escalates: Greece has moved to stem panic in the country and stop speculators taking advantage of its escalating debt crisis. >>> Malcolm Moore in Shanghai | Wednesday, April 28, 2010