Markets wobbled this week as the Greek drama neared its final act and China’s stockmarket kept falling.
European governments gave Greece until Sunday to come up with a new plan or face Grexit. The banks stayed shut and reports of food and medicine shortages in hospitals began to circulate. The Greeks came up with a new three-year plan, but hopes for a deal weren’t high.
The Shanghai Composite index fell another 7% on Wednesday, despite government efforts to prop it up. A third of listed Chinese companies have now suspended their shares. The ructions in China have unnerved Europe too: markets have hit six-month lows. Some commodities are near their lowest levels since the financial crisis.
What the commentators said
Serious crises usually prompt a flight to safety, said James Mackintosh in the Financial Times. Yet the “ultimate haven”, gold, has fallen and the yen has barely risen. The Swiss franc, another traditional bolthole, has fallen with the euro. The pattern suggests investors think “each crisis will be contained, but global growth will be slower”.
The worst thing about the Chinese market slide is the government’s response, said The Times. Constant meddling has failed to restore stability, while this hyperactivity makes a mockery of the plan to give markets a “decisive” role in the economy. The government comes across as a “one-party state torn between Mao and Milton Friedman”. Its frantic faffing also prompts “a deeper worry”: the state is concerned that GDP is already much lower than the official 7.4%.
As for Greece, as Ambrose Evans-Pritchard noted in The Daily Telegraph, we may have reached “a cataclysmic end that nobody planned, nobody seems able to escape, and that threatens to shatter the great European order in the process”.