Global markets tanked Monday as the world struggled to make sense out of Greece’s referendum vote.
A down morning for Wall Street worsened over the course of the afternoon Monday. The Dow lost more than 330 points, or roughly 2% of its value. The S&P dropped more than 2% and Nasdaq was the loss leader at the end of Monday. Nasdaq pared 2.4% of its value at the close Monday.
One banking sector source said that an expected bond pricing fell apart over the weekend. Elsewhere, other Wall Street pros said the uncertainty posed to US markets by the Greek referendum will hurt dealmaking in the near-term.
But no one we talked to is all that scared for the future.
For one thing, bankers and banks believe that the still-brewing crisis in the EU doesn’t have the same potential to fan out over as many countries and tank stocks.
Business Insider spoke with bankers, traders and economists and this is what they had to say:
- Unlike 2011, there’s no threat of ‘contagion’ to other parts of the European Union. “Unless there is a sense that Greece becomes a contagion, it’s a near-term issue,” one banker said.
- “There’s absolutely no long-term threat to the US,” an economist said. But, he added there is “short-term” impacts that the market is currently experiencing.
- There’s a big geopolitical angle that few people are addressing. If Greece were to exit the Euro, it could become “a potential Putin foothold,” the economist said. Although it may not be top-of-mind for the Greeks, elsewhere in the EU officials want to curb Russia’s influence.
- There’s an even bigger international factor for the global economy than Putin, or Greece. “Greece plus China’s markets are in bear territory is a reason investors will be cautious on financings,” the banker said.
- Traders aren’t sweating the Monday market meltdown, either. “I think a lot of funds had priced today in already,” one hedge fund employee said. And bankers seem to feel the same way.
- After all: it’s summer. Deals are supposed to slow down. The markets have plenty of time to get back to normal. “As long as we have some clarity before the September deal flood, we should be OK,” one banker says. “US-driven M&A may experience a pause but we are in the middle of summer when the deal market historically slows down.”