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Global stocks slip on Greece

Global stocks slip on Greece

Stocks fell in Asia and Europe, where Germany’s main index was down 2.5 per cent and the market in Athens remained closed for the week.

By (Agencies)

Published: Tue 30 Jun 2015, 11:00 PM

Last updated: Wed 8 Jul 2015, 3:06 PM

London/New York — Global stock markets took a battering on Monday after Greece shuttered its banks for the week and imposed limits on cash withdrawals — developments that have reinforced fears the country is heading for a messy exit from the euro that could shake the world economy.

Stocks fell in Asia and Europe, where Germany’s main index was down 2.5 per cent and the market in Athens remained closed for the week. Wall Street indexes were expected to open over one per cent lower while the euro fell sharply, as did oil prices.Global stocks slip on Greece

Investors are fretting about the uncertainty posed by the events in Greece. Though many experts say the global economy — even Europe — is in better shape to withstand a potential Greek exit from the euro, some point out that its implications are not fully clear.

Greece’s crisis escalated over the weekend after Greek Prime Minister Alexis Tsipras said the country will hold a referendum on a bailout plan proposed last week by the country’s creditors.

In response to the referendum proposal, Greece’s eurozone partners refused to extend the country’s bailout programme, which expires on June 30, and the European Central Bank capped its emergency support for the country’s banks. That prompted the Greek government to announce limits on money withdrawals and transfers. Daily cash withdrawals are capped at €60 ($67) per account.

“The images of queues at ATMs in Greece are stripping traders of what little confidence they have left in the nation, and the financial earthquake that happened in the eurozone over the weekend can be felt around the world,” said David Madden, market analyst at IG. “Of all the market sell-offs we have witnessed due to Greece this one is the worst in years, and traders who thought a Greek exit wasn’t on the cards are quickly reassessing their point of view.”

The CAC-40 stock index in France was down three per cent at 4,908 while Germany’s DAX fell 2.5 per cent to 11,198 points. The FTSE 100 index of leading British shares was 1.4 per cent lower at 6,657.

The first markets to trade in the wake of the weekend developments were those in Asia and they set the tone. Among the main markets there, the Nikkei 225 stock average in Tokyo slid 2.9 per cent to 20,109.95 while the Shanghai Composite Index fell 3.3 per cent to 4,053.03 despite China’s surprise weekend interest rate cut. Hong Kong’s Hang Seng fell 2.6 per cent to 25,966.98 and Sydney’s S&P/ASX 200 was off 2.2 per cent at 5,422.50 points.

 Most US stocks fell on Monday. Trading was heavy, with investors dropping riskier assets such as equities and commodities.

The S&P 500 fell nearly one per cent and nine of the 10 main S&P sectors retreated. The only group to rise was utilities, considered a defensive play. S&P 500 index futures fell nearly two per cent in premarket trading. 

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