Stock markets worldwide were lower on Monday after Greece voted not to accept the terms of the proposed bailout. In the aftermath of the vote, Finance Minister Yanis Varoufakis has resigned and European leaders have requested Greece’s return to the negotiations table. While Varoufakis was against the terms of the bailout, reports from within negotiations indicate that European leaders were infuriated by him and did not want him as part of future negotiations. France and Germany both rushed Greece to come up with serious bailout proposals in order to restart financial aid talks after previous offers were rejected. French President Francois Hollande and German Chancellor Angela Merkel urged Greece to move quickly if it wants to secure aid in exchange for reforms. In order to raise the pressure prior to today’s Eurozone summit, the European Central Bank (ECB) kept a tight grip on funding for Greek banks. Currently, emergency support from the ECB is the only factor keeping Greek banks afloat.
European stock markets were lower on Monday, although not as low as feared in light of Greek’s overwhelming “no” vote. The UK’s FTSE declined 95 points, or 1.43%, to trade at 6535.68. Germany’s DAX declined 167.78 points, or 1.52% to trade at 10890.63. The French CAC fell 96.68 points, or 2.01%, to trade at 4711.54. The effect of Greece’s vote were not limited to just Europe. U.S. stocks fell broadly as investors diverted to safe-bet investments such as government bonds and oil plunged as much as 8%. The Dow Jones Industrial Average declined 46.53 points (0.3%) to trade at 17683.58. The Standard and Poor’s 500 Index was down 8 points, or 0.4%, to trade at 2068.76. The Nasdaq Composite fell 0.3% to trade at 4991.94.
Crude oil tumbled $4.4 to trade at $52.53 after worries that European demand would slow down as a result of the Greek crisis. At the same time, advancement in negotiations over Iran’s nuclear plans have created concerns that once sanctions will be lifted the market will be flooded by Iranian oil and prices would plummet.
Asian shares continued to decline early on Tuesday despite a number of measure employed by Beijing in recent days. In recent weeks Chinese shares have declined 30% and despite a pause on Monday, the CSI300 index of the largest listed companies in Shanghai and Shenzhen was down 2% on Tuesday. The Shanghai Composite Index lost 1.4% over the same time.
The Reserve Bank of Australia (RBA) is scheduled to release its interest rate decision today. Tomorrow, minutes from the Fed’s Federal Open Market Committee (FOMC) will be released. After last week’s positive U.S. employment report, some expect the Federal Reserve to move closer to a rate hike.