Spreadex Market Update
Crucial Greek decisions spark intense sell-off as Grexit chances rise
With Greece denied an extension to see them through to Sunday’s referendum, the country is facing default tomorrow evening as it (likely) fails to repay its bundled €1.6 billion in IMF debt. It is set to be an arduous week for all involved, as the markets try and withstand the severely bearish tone, and gloomy prospect of uncharted territory, for the next 5 days. So far that aim isn’t going too well, with the DAX immediately falling by around 4.5% whilst the CAC did the same, emblematic of huge losses across the region; the optimism found exactly one week ago looks even more like a market-wide delusion than it did at the time.
Tsipras’ bold call for a referendum has the air of a final Hail Mary for a leader whose position has looked decidedly shaky for the interminable month of June. The Greek PM now has his fate in the hands of the Greek people once again, in a test of his public’s willingness to follow through on the policies they voted Syriza in on in the first place.
Of course there was no chance the FTSE was going to be immune to the market consequences of this Eurozone-defining week, and the UK index plunged by 2% at the open, hitting a 5-month low in the process. And with Greek banks shut until next Monday the entire sector is suffering, with RBS, Barclays, Lloyds and HSBC all down 2%-3% (with much more severe declines for banks on the continent) as investor try to flee to safer ground. There were similarly tough times for travel companies, with Tui and Thomas Cook tumble 10% and 7% respectively following the horrific events of last Friday.
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