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| Greek crisis: financial markets buffeted in early trading after no vote | |
| (35 minutes later) | |
| Share prices were sent tumbling across Asia-Pacific on Monday after Greece’s resounding no vote in the weekend’s bailout referendum, but early losses appear to have failed to descend into regional turmoil. | |
| All eyes were on how Japan and other key Asian markets would react after Greece overwhelmingly rejected the terms of a bailout offered by the country’s international creditors on Sunday. | All eyes were on how Japan and other key Asian markets would react after Greece overwhelmingly rejected the terms of a bailout offered by the country’s international creditors on Sunday. |
| Japan’s Nikkei stock average was down 1.4% in early trading, after it dropped by 1.5% minutes after the market opened. | Japan’s Nikkei stock average was down 1.4% in early trading, after it dropped by 1.5% minutes after the market opened. |
| Related: Greek referendum: we are back to wild markets of the 2008 banking crisis | |
| In Australia, around $A30bn was wiped off the value of shares as the country’s benchmark ASX200 index fell almost 1.5% at the opening. | |
| As expected, rising fears of a Greek exit from the eurozone sent investors flocking to the yen – considered a safe haven in times of global financial uncertainty. | As expected, rising fears of a Greek exit from the eurozone sent investors flocking to the yen – considered a safe haven in times of global financial uncertainty. |
| On the forex markets, the euro was at 134.91 yen, compared with from 136.31 yen last Friday. The dollar also slipped to 122.58 yen from 123.05 yen. | On the forex markets, the euro was at 134.91 yen, compared with from 136.31 yen last Friday. The dollar also slipped to 122.58 yen from 123.05 yen. |
| A pattern emerged of early jitters in the currency markets followed by mild recoveries. The Australian dollar dipped to a six-year low of US$0.7484 in early trading but later recovered to 0.7509. | A pattern emerged of early jitters in the currency markets followed by mild recoveries. The Australian dollar dipped to a six-year low of US$0.7484 in early trading but later recovered to 0.7509. |
| The euro, meanwhile, was down 0.8% at $1.1015 but off an early low of $1.0967. It had initially dropped around 1.5% against the yen. The US dollar also recovered from its early losses against the Japanese currency to 122.48 yen. | The euro, meanwhile, was down 0.8% at $1.1015 but off an early low of $1.0967. It had initially dropped around 1.5% against the yen. The US dollar also recovered from its early losses against the Japanese currency to 122.48 yen. |
| A similar story was unfolding in stock markets, although investors were clearly spooked by mounting uncertainty over Greece’s continued membership of the eurozone. | A similar story was unfolding in stock markets, although investors were clearly spooked by mounting uncertainty over Greece’s continued membership of the eurozone. |
| By late morning, Japan’s Nikkei stock index was trading down 1.4% at 20263.27, having fallen 339.64 points to 20,200.15 just after it opened. South Korea’s Kospi fell 1.0% to 2,082.69. | By late morning, Japan’s Nikkei stock index was trading down 1.4% at 20263.27, having fallen 339.64 points to 20,200.15 just after it opened. South Korea’s Kospi fell 1.0% to 2,082.69. |
| Elsewhere in the Asia-Pacific, New Zealand’s benchmark slipped 0.8% to 5,794.73. Shares were also lower in Taiwan, Singapore and Malaysia. | |
| MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5%. | MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5%. |
| There were growing fears over whether emergency measures taken by China over the weekend would succeed in prevent its stock market from crashing, following a 30% plunge over the last three weeks. | There were growing fears over whether emergency measures taken by China over the weekend would succeed in prevent its stock market from crashing, following a 30% plunge over the last three weeks. |
| Analysts said that regional market panic was unlikely, even after Athens appeared to take a step closer to a “Grexit” by roundly rejecting the bailout terms set by its international creditors But they added that negotiations this week would be critical. | Analysts said that regional market panic was unlikely, even after Athens appeared to take a step closer to a “Grexit” by roundly rejecting the bailout terms set by its international creditors But they added that negotiations this week would be critical. |
| “The Greece no vote is a surprise,” Shoji Hirakawa, chief equity strategist at Okasan Securities, told Bloomberg News. “But the key is that the direction is going toward more talks after this.” | |
| Other analysts said markets had not expected Greek voters to reject the terms of the bailout so emphatically – a move that could see further losses on Monday and trigger an investor rush to US Treasuries or other government bonds that are seen as largely immune to market turbulence. | Other analysts said markets had not expected Greek voters to reject the terms of the bailout so emphatically – a move that could see further losses on Monday and trigger an investor rush to US Treasuries or other government bonds that are seen as largely immune to market turbulence. |
| Markets in Europe were poised to open lower, but seemed unlikely to plunge dramatically according to futures trading. The FTSE was set to fall 90 points while Germany’s Dax was expected to see a bigger drop. | |
| Peter Chatwell at Mizuho International in London said the strength of the no vote was “a shock to the market,” adding that “all safe haven trades should benefit”. | Peter Chatwell at Mizuho International in London said the strength of the no vote was “a shock to the market,” adding that “all safe haven trades should benefit”. |
| Pavel Molchanov, equity research analyst at Raymond James, said: “The result was clearly a more decisive ‘no’ than the polls had suggested. This couldn’t be more bearish for equities and commodities alike.” | Pavel Molchanov, equity research analyst at Raymond James, said: “The result was clearly a more decisive ‘no’ than the polls had suggested. This couldn’t be more bearish for equities and commodities alike.” |
| In one of the day’s more colourful commentaries, analysts at Japan’s Mizuho Bank said the Sunday’s “Greferendum” had turned out to be a “Grief-erendum”. | In one of the day’s more colourful commentaries, analysts at Japan’s Mizuho Bank said the Sunday’s “Greferendum” had turned out to be a “Grief-erendum”. |
| On what most had expected to be a tricky day for markets around the world, dealers stressed that uncertainty over Greece’s future had not rocked markets as badly as some might have expected. | On what most had expected to be a tricky day for markets around the world, dealers stressed that uncertainty over Greece’s future had not rocked markets as badly as some might have expected. |
| In a rare glimmer of hope, they pointed to signs that the European Central Bank would step in early with a pledge of extra liquidity. At the very least, the ECB is expected to maintain emergency funding for Greek banks at its current restricted level. | In a rare glimmer of hope, they pointed to signs that the European Central Bank would step in early with a pledge of extra liquidity. At the very least, the ECB is expected to maintain emergency funding for Greek banks at its current restricted level. |
| “A lot depends now on what the ECB does with liquidity support for the Greek banks,” said Antonin Jullier, head of equity trading strategy at Citi. | “A lot depends now on what the ECB does with liquidity support for the Greek banks,” said Antonin Jullier, head of equity trading strategy at Citi. |
| Attention is now turning to how European markets respond later in the day, as well as the outcome of an emergency meeting between German Chancellor Angela Merkel and French President Francois Hollande in Paris on Monday afternoon. | Attention is now turning to how European markets respond later in the day, as well as the outcome of an emergency meeting between German Chancellor Angela Merkel and French President Francois Hollande in Paris on Monday afternoon. |
| “The ECB has the capacity to limit the spread of contagion ... but we might still see a fall of 3% on European markets on Monday,” added Jullier. | “The ECB has the capacity to limit the spread of contagion ... but we might still see a fall of 3% on European markets on Monday,” added Jullier. |
| Greece’s EU and IMF creditors will discuss their next move on Tuesday. | Greece’s EU and IMF creditors will discuss their next move on Tuesday. |
| “If the troika uses this vote to boot Greece from the euro, the risk off trade will likely continue to widen spreads,” said Steve Blitz, chief economist at stockbroker ITG. | “If the troika uses this vote to boot Greece from the euro, the risk off trade will likely continue to widen spreads,” said Steve Blitz, chief economist at stockbroker ITG. |
| “At risk going forward is the possibility of any number of nations seeking to divorce themselves from the euro in order to more easily, in their view, meet the ongoing rush of future obligations tied to pensions, etcetera.” | “At risk going forward is the possibility of any number of nations seeking to divorce themselves from the euro in order to more easily, in their view, meet the ongoing rush of future obligations tied to pensions, etcetera.” |