Stocks
across Europe tumbled Monday, with investors rattled as Greece closed
its banks and stock market, with the country looking set to default on
its debt as talks with creditors unraveled.
German and French shares each suffered their worst loss since Nov. 1, 2011, according to FactSet, leaving the DAX 30
DAX, +0.05%
down 3.6% at 11,083.20, and France’s CAC 40
PX1, +0.09%
lower by 3.7% at 4,869.82. Spain’s IBEX 35
IBEX, +0.62%
lost 4.6% to end at 10,853.90, and the U.K.’s FTSE 100
UKX, -0.45%
fell 2% to 6,620.48.
The Stoxx Europe 600
SXXP, -0.24%
marked its sharpest decline
since October, dropping 2.6% to 386.43, led by a 4% fall for bank shares
FX7, +0.46%
. Only 16 index components
posted gains. Among those few, British online grocer Ocado PLC
OCDO, -1.19%
rose 1.2% following reports it’s preparing to expand overseas.
The Greek stock market
GD, +2.03%
will be closed all week. Banks
in Greece are closed until July 6 and locals can only take €60 ($66.70) a
day out of ATMs as cash-strapped Greece curbed capital flight. The
drastic moves were set in motion after Greek Prime Minister Alexis
Tsipras unexpectedly
proposed a referendum asking voters whether to accept reform measures demanded by the country’s lenders. The vote will take place July 5.
Talks
between Greece and its creditors may “continue to go on and we could
still get a resolution to the slow-motion car crash that is the Greek
economy within days but that doesn’t help those looking to trade the
markets,” said James Hughes, chief market analyst at eToro, in a note.
“This week really now holds very few answers until we get to the
referendum on Sunday.”
Greece’s debt drama will likely hold sway
over markets on Tuesday, as Greece faces defaulting on a €1.55 billion
($1.73 billion) payment to the International Monetary Fund. Also as of
Tuesday, Greece looks set to go without funding from international
lenders.
If Greece defaults on the €3.5 billion it owes to the
European Central Bank on July 20, that “would almost certainly lead to
the dreaded Grexit,” Hughes added. Grexit is shorthand for the
possibility that Greece will exit the eurozone or the European Union.
Read: Analysts on what investors can expect next.
Italian stocks
FTSEMIB, +0.83%
slid 5.2% to 22,569.95, marking
their worst day since November 2011, and Portugal’s PSE 20 index
PSI20, -0.12%
gave up 5.2% at 5,530.50, the biggest decline since early July 2013.
U.S. stocks
SPX, -2.09%
DJIA, -1.95%
were sharply lower Monday, and Asian shares
HSI, +1.09%
SHCOMP, +5.53%
overnight closed with deep losses. Chinese shares brushed off a decision Saturday by
China’s central bank to cut interest rates.
The
Global X FTSE 20 ETF
GREK, -19.44%
and U.S.-listed shares of National Bank of Greece SA
NBG, -23.95%
each fell by double digits.
Read: Why Europe still wants Greece in its unhappy family.
Euro and bonds: The euro was
volatile against its counterparts, sliding 1% against the Japanese yen
EURJPY, -0.51%
to ¥137.01, while the British pound
GBPUSD, -0.1144%
had climbed above $1.41 to
trade at levels not seen since 2007. Sterling later pared the gain.
Against the U.S. dollar
EURUSD, -0.4005%
the euro turned slightly higher to trade above $1.11.
Greek
bond prices were slammed lower, pushing the yield on two-year debt
higher by 16.4 percentage points to 35.05%, and the yield on 10-year
debt up 4.74 percentage points to 14.65%. Investors flocked to the
perceived safety of German bonds, pushing the 10-year bund
TMBMKDE-10Y, -0.76%
yield down 12 basis points to
0.786%. But prices for bonds in so-called peripheral European markets,
including Spain, Italy and Portugal, fell.
Read more in Bond Report.
The European Commission on Monday
called on the Greek people to vote “yes” in next week’s referendum, warning that the European Union would be fractured otherwise.