European stock exchange traded funds were set for an ugly open in the U.S. on Monday as single-country indexes in the region were suffering declines of 3%. Worries over Greece’s financial condition and the Eurozone debt crisis rippled through global markets.
France’s CAC 40 declined 4.4% while Germany’s DAX fell 3.1%. ETFs tracking European stocks were falling to start the week after Friday’s rout. [Europe ETFs Sink on Debt Fears]
The euro dropped to a 10-year low against the yen, and investors piled into German bonds on fresh speculation that Greece faces a possible default and that Italy’s debt crisis has worsened, BBC reported.
Also Monday, the Associated Press reported there was an explosion at a nuclear plant in Southern France.
In U.S. stocks, Dow futures fell about 200 points while S&P 500 futures slipped over 20 points. SPDR S&P 500 ETF (NYSEArca: SPY) declined 1.5% in preopen trade.
The iShares Lehman 20+ Year Treasury Bond (NYSEArca: TLT) rose 0.7% as yields on the 10-year note traded under 1.9%. [Treasury ETFs Jump]
“The market is in extreme fear,” Charles Berry, a fixed- income trader at Landesbank Baden-Wuettemberg, told Bloomberg. “It’s the problem in the euro area that drove that sentiment.”
“The outlook for Greece is almost completely unknown. Support for the country appears to be shaking. The market is starting to think the worst could happen. It’s as if policymakers are starting to prepare for that,” said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust and Banking, in a Reuters report.
Also, French banks are bracing for a credit downgrade from Moody’s, according to a separate report.
SPDR S&P 500 ETF
Full disclosure: Tom Lydon’s clients own SPY.