After a few months of a near constant rally, fear is creeping back into the market. Investors were hoping to see a Greek deal get done last week. All signs were pointing to a done deal between the countries and its creditors, but soon fell apart as other euro nations demanded more cost cutting measures from the country in order to receive another rescue package.
Greece had already implemented many austerity measures over the past year amid protests from Greeks. Protest began again late last week as Greeks went on a nationwide strike. One of the political parties also backed out of the deal after Germany demanded more cost cutting measures.
Stocks reacted negatively to this news as each of the major indices fell more than 0.5% on Friday. The volatility index, or VIX, jumped more than 11% on Friday as traders look to hedge against a downturn in the market. The continued debt crisis in Europe will continue to weigh on traders’ minds.
Analysts are also watching the situation in Iran very closely after the country said it would announce “very important” nuclear progress. Iranian president Mahmoud Ahmadinejad told thousands of supporters at a rally, “In the coming days the world will witness Iran’s announcement of its very important and very major nuclear achievements.” No details were given, but the U.S. and Israel will be watching very closely to see what Iran does in the coming days and weeks.
Next week will be another interesting week in the markets as Europe will continue to take center stage. Will a Greek deal actually get done? Or will the EU keep flailing around until Greece defaults.