Mar 24 |19:37
Cyprus continued to dominate headlines.
First the scoreboard:
Dow: 14,447.75, -64.28, -0.44%
S&P 500: 1,551.69, -5.20, -0.33%
NASDAQ: 3,235.30, -9.70, -0.30%
And now the top stories:
- Markets were rallying this morning after the EU and Cyprus agreed on a deal Sunday night to bailout the island nation's banking system. Under the new bailout agreement Cyprus' two largest banks will take haircuts, but insured depositors with less than €100,000 in their accounts won't be impacted. Under EU law, deposits of above €100,000 are not insured.
- The Dallas Fed manufacturing survey for March jumped to 7.4, from 2.2 in February. This beat expectations for a reading of 3.2. The gains were led by the shipments sub-index.
- But stocks tumbled after Eurogroup President Jeroen Dijsselbloem told Reuters and FT the Cyprus bailout deal could considered a template for bank restructurings elsewhere in the euro area. The S&P 500 which had been flirting with record highs again but it failed to close above its record high of 1565.15.
- Just hours later however the Eurogroup issued a statement backing down from Dijsselbloem's earlier statement. "Cyprus is a specific case with exceptional challenges which required the bail-in measures we have agreed upon yesterday. Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used."
- Economists are saying that despite last night's deal, Cyprus has effectively left the euro. This is because a euro in Cyprus would be worth less than a euro in Germany. Think tank Open Europe said: "Ultimately, money is no longer fungible between Cyprus and the rest of the Eurozone and, at this point in time, it’s hard to argue that a euro in Cyprus is worth the same as a euro elsewhere. The real problem though may not be imposing the controls but removing them – Iceland still has capital controls in place, five years after it installed them (despite having the advantage of a devalued currency)."
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