Stocks fell across the globe in response to Greece’s ‘No’ vote in a referendum on whether to accept the latest bailout package offered by its European creditors. The big loser, amid selling in markets from Asia to Europe to the US, was crude oil.
First, the scoreboard:
- Dow: 17,666.98, -63.13, (-0.36%)
- S&P 500: 2,063.95, -12.83, (.0.62%)
- Nasdaq: 4,978.04, -31.18, (-0.62%)
And now, the top stories on Monday:
- Greek voters overwhelmingly rejected the latest European bailout package on Sunday. With all votes counted, the Greek government said that 61% voted “No” on tougher austerity measures, while 39% voted “Yes.” Prime Minister Alexis Tsipras praised his country’s citizens for rejecting the bailout package, saying that this will now allow him to negotiate better terms with creditors. Meanwhile thousands of people gathered in the streets of Athens to celebrate the results.
- The European Central Bank announced that Greek banks would not get any more assistance. The ECB will keep its Emergency Liquidity Assistance to Greece unchanged at about €89 billion ($US98.38 billion). This will put additional pressure on the banks that are already short on cash and may reopen later this week. The ECB also announced that it will increase the haircuts on collateral accepted by the Bank of Greece.
- While we saw a lot of volatility following the “No” vote in Greece, the crude oil market has been the biggest loser so far. On Monday, West Texas Intermediate crude oil fell as much as 7.8% to as low as $US52.48 a barrel. This is the biggest intraday move for crude oil since February and the lowest price for WTI crude since early April.
- The euro was also crushed today after the vote, but eventually pared those losses and was around $US1.105 to the US dollar near the close, down about 0.5%. As a Grexit appears more and more likely, the uncertainty is taking its toll on Europe.
- Greece’s Finance Minister Yanis Varoufakis said last week that if his country voted “Yes” on the bailout package, he would resign. Despite the “No” win, Varoufakis unexpectedly resigned, in what The New York Times said “appeared to be the first move at conciliation toward Greece’s creditors by the government of Prime Minister Alexis Tsipras.” Economist Euclid Tsakalotos was tapped to become the new finance minister.
- In a joint press conference in Paris, German Chancellor Angela Merkel and French President Francois Hollande told reporters that they respect the results of Sunday’s vote. While the two clearly were not happy with the “No” vote they maintained that there is still room for negotiation with Tsipras’ government. Thus, it’s not a guarantee that Greece will be kicked out of the euro.