Global equity markets retreat as Greek crisis deepens

Monday, June 29, 2015

There is a high level of uncertainty dominating the global equity and commodity markets as the situation in Greece deteriorated significantly over the weekend. Greek Prime Minister Alexis Tsipras called for a referendum in the early hours on Saturday 27th June, offering Greek voters the opportunity to accept or reject the bailout programme. The draft proposal of Greece’s creditors consists of two documents with the first called “Reforms for the Completion of the Current Programme and Beyond” and the second document is called “Preliminary Debt Sustainability Analysis”. However, it should be noted that neither document has been made publicly available, or translated in to Greek. After five months of contentious and as yet unsuccessful negotiations the Greek government failed to reach an agreement with its creditors. Now Prime Minister Alexis Tsipras will be asking the Greek people to decide in just five days whether or not they would like to accept a proposal by the country’s creditors to unlock as much as 15.5 billion euro of aid in return for sales-tax increases and pension reforms.

The eurozone’s finance ministers rejected Greece’s request for a one month bailout extension yesterday thereby prompting the Greek authorities to take extraordinary emergency measures.

The Greek government confirmed that Greek banks will be closed until at least next Monday 6th July (the day after the referendum). The cash withdrawals limit from ATMs has been set to 60 euros per day during this period. The Athens Stock Exchange will be closed today, while Greek executives say that it will be possibly closed for the rest of the week. Due to liquidity problems, Greek bank executives mentioned that banks will possibly need a new bailout programme in order for the banks to be opened next Tuesday 7th July, otherwise a new currency needs to be introduced.

A new period of uncertainty begins across the European equity markets. This morning, the DAX index retreated sharply over 4.5% in early trade, while the CAC, IBEX and Italian equity benchmark indices plunged between 3.4% and 4.0%. The London equity benchmark index managed to limit its heavy losses retreating nearly 2% at the time of writing. The Euro held fairly well considering the high uncertainty across the European markets and the future of Eurozone. The European currency is holding around 1.1080 against the USD.   

There is increasing volatility and nervous trading conditions across the markets this morning. The Hang Seng index plunged over 750 points (2.83%) overnight while the Nikkei index retreated over 2.8%.

Precious metals edged higher this morning, with gold climbing towards $1180/ounce. Silver posted limited gains towards $16. Base metal prices have been fairly mixed in early trade.


EUR Curncy (Euro Spot )  Daily 29 2015-06-29 09-22-15

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