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US stocks suffer light July 4 hangover

Published: 15:46 06 Jul 2015 BST

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US markets opened lower in the wake of Greece’s emphatic vote in favour of rejecting its creditors’ bailout terms.

As with European markets, however, stocks have not been hit as hard as some pundits feared, with the benchmark S&P 500 off six points, or 0.28%, at 2,070.

The tech-heavy Nasdaq Composite was down a dozen points at 4,997 while the old war-horse, the Dow Jones average, was 54 points lower at 17,676.

“The markets are remarkably calm. Stocks are trying to recoup earlier losses, while EURUSD volatility is lower than it was during last month’s peak,” notes Kathleen Brooks, a research director at foreign exchange firm Forex.com.

“As we mentioned on Sunday evening, the market reaction has been less severe than last week when capital controls were first announced. The relative stability may be down to a few of things: 1, investors are still hopeful that a deal can be reached to save Greece; 2, if no deal is reached then the European authorities will give Greece the help it needs to leave the Eurozone gracefully; 3, intervention from global central banks to stem excess volatility in the FX market, and protect the downside for the EUR,” she added.

Having not got the result it wanted to see in Sunday’s referendum, Germany appears to be in no hurry to get back to the negotiation table with Greece.

Steffen Seibert, a spokesman for the German chancellor, Angela Merkel, said the door remains open for a restart of debt negotiations, but said “conditions are currently not given to enter negotiations about a new aid programme”.

Noted French economist Thomas Picketty has weighed in with his views, saying that Germany was in no position to lecture other nations about failure to repay debt, given Germany did not repay its external debt after the Great War of 1914-18; nor did it repay its debts after World War II.

“The younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s. We need to look ahead. Europe was founded on debt forgiveness and investment in the future,” Picketty said in an interview with German newspaper Die Zeit.

Ramifications of the Greek vote kept traders interested on a day that has been short of corporate news flow.

Health insurer Ætna comes under selling pressure after announcing its agreed takeover of sector peer Humana last Friday; US investors were denied the opportunity to dump Ætna shares on Friday as markets were closed ahead of Independence Day.

In other mergers & acquisitions news, Botox maker Allergan is barely changed after revealing it is making an agreed US$125mln bid for Oculeve, a maker of treatments for dry-eye disease.

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