ATHENS – Greece’s government has claimed “a clear mandate” for less stringent bailout conditions as voters looked set to overwhelmingly back its rejection of further austerity in a key referendum.
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The benchmark S&P/ASX200 index closed 63.3 points down at 5,475.0, having fallen more than 1.8 percent earlier in the session. So the initial response to Sunday’s Greek referendum was negative but not panicked.
“Grexit” uncertainty, a rising U.S. dollar and increasing concerns about the Chinese economy added to the bearish sentiment. Wheat and soybeans on the Chicago Board of Trade both fell at least 2.1 per cent each.
Greeks voted against European-imposed austerity measures in a move that could see the country exit the euro zone.
The scope for compromise in future negotiations on a financial rescue package for Greece remains unclear. The European Central Bank unveiled a significant new weapon in its armory last week, when it said it may buy the bonds of a number of companies in vulnerable eurozone countries such as Italy, Portugal and Spain as part of its massive stimulus program.
Repercussions of the referendum nonetheless were felt across the globe. South Korea’s Kospi fell 2.4 percent.
“The Shanghai Composite had a stunning open but increased worries about the Chinese market and the volatility we are seeing has been a strong factor at the close”, she said.
Still, the market declines are not as dramatic as many had feared, something analysts are crediting to the resignation of the Greek finance minister, which might help bailout talks resume. Smith School of Business.
“This is a path that suggests to us that there is now a high likelihood of Greek exit from the euro, and possibly under chaotic circumstances”, it said in a research note.
The gains were spread across the Australian market on Tuesday, with the exception of energy stocks, which suffered due to a slide in oil prices. Shares were lower in Taiwan, Singapore and Malaysia and were expected to take a hit across Asia and beyond.
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In early trade the Australian dollar was fetching 74.87 United States cents and 67.77 euro cents, from 75.11 United States cents and 67.97 euro cents late Monday. The dollar was little changed, slipping to 122.53 yen from 122.88 yen on Friday. Brent crude lost as much as 1.6 per cent, sliding below $60 a barrel for the first time since April.
