Euro ETFs Suffer From Greece (EWI, EFA, FXE)

Courtesy of John Nyaradi.

European ETFs such as (AMEX:EWI), (AMEX:EFA), and (AMEX:FXE) all suffered today on news that Greece plans to hold a referendum vote in order to pass Euro austerity measures.

I do wonder what on earth Greek Prime Minister Papandreou is thinking, and aparantly his government is wondering the same thing, as Papandreou faces a vote of no confidence this Friday.

Either way, it appears we are back to square one before last week’s massive rally and Euro-compromise, as markets have returned to previous support levels as predicted last week.

The pain starts with the iShares MSCI EAFE Index Fund (AMEX:EFA), which tracks stocks within the Euro-zone and far-east. (AMEX:EFA) lost a whopping 8.25% today in response to Papandreou’s speech; it appears that investors are not happy and do not want to keep drinking the sugar water served last week.

The pain continued with the iShares MSCI Italy Index (AMEX:EWI), as the ETF crashed 13.4% today. If investors don’t like Greece, they certainly do not like Italy, which could be next on the chopping block, and this serves as a painful reminder that the Euro crisis is far from being over as Italy mammoth-like compared to Greece.

And lastly, the CurrencyShares Euro Trust (AMEX:FXE) did not fare will either as the ETF took a 3.28% drop while investors lost faith in the Euro dollar.

Markets at home did not respond well either, as the SPDR S&P 500 ETF (AMEX:SPY) fell hard and lost 5.07%, and SPDR Dow Jones Industrial Average ETF (AMEX:DIA) followed with a 4.65% drop.

All in all, it appears that we are back to square one with Greece, and I am curious how Chancellor Merkel and President Sarkozy will respond in the coming days and weeks.

In other mundane news, tomorrow brings the FOMC statement on interest rates and Chairman Bernanke’s press conference, alongside the ADP private sector employment report.

Speaking about economic recovery, American auto sales have increased for October, however this morning’s ISM report also contributed to today’s panic. Meanwhile, MF Global Holdings (NYSE:MF) continues to make the news with new reports of the Bank using investors’ money to stay afloat. Read more about MF Global.

Bottom Line: Greece is a wildcard, and (AMEX:EWI), (AMEX:EFA), and (AMEX:FXE) all show for it. It seems we are back to square one with Europe, and I do wonder what Chairman Bernanke has to say tomorrow about the Europe situation, and even more importantly, our situation at home.