ETFs Skid On Greece

Greece was “saved” for less than 24 hours but now major ETFs around the world skid into the weekend on Greek fears

After wangling for a week or more, Greek took their new deal to the European Ministers meeting, only to have it promptly rejected and so as we go into the weekend, major global markets and ETFs have again hit the skids on Greece.

After two years of wangling, the European zone is demanding yet more and deeper cuts for Greece to qualify for the next round of bailout loans that will keep the country from going bankrupt on March 20th.

Major European and United States ETF responded negatively to the new developments:

SPDR Dow Jones Industrial ETF (NYSEARCA:DIA) slumped on the news, declining triple digits during the day to close down 89 points by Friday’s close.

SPDR S&P 500 ETF Trust (NYSEARCA:SPY) took the news poorly, as well, closing down 9 points on Friday and -0.2% on the week.

Vanguard MSCI Europe Index (NYSEARCA:VGK) declined 2.1% as Europe grew increasingly nervous going into the weekend.

iShares MSCI Germany Index (NYSEARCA:EWG) shed 2.6% as investors realized that new developments, whatever the possible outcome, would likely be bad news for Germany.

Currency Shares Euro Trust (NYSEARCA:FXE) slumped 0.9% as pressure mounted on the common currency.

In Greece, a revolt took place in the government as six cabinet members resigned in response to more European demands for austerity that included further reductions in jobs, pension and pay to qualify for the next round of bailout money.

Anarchy spread to the streets of the country with riots and a 48 hour strike by the country’s major unions and now yet another vote on the latest package of austerity measures will likely be held early next week.

On the European side of the crisis, the attitude is a “pay to play” position wherein Greece must meet the demands or be cut loose by the “troika” of the European Union, European Central Bank and International Monetary Fund.

Hanging in the balance is a mid-February deadline that must be met in order to gain approval for the bailout before the multi-billion Euro bond rollover needs to be met on March 20th.  Now basically six days remain for Greece to identify and approve more than 300 million Euro dollars in additional cuts that include more than 20% in wage cuts, lowered pension benefits and up to 150,000 public jobs.

Bottom line:  Greece continues to roil world markets and this story isn’t over as we head into next week and yet another Parliamentary vote in Greece and high level meetings in Europe.