Markets around the world reacted strongly Monday to the latest twists and turns in the drama playing out in Greece. Stocks tumbled from Hong Kong to London, gold and U.S. Treasurys strengthened as investors looked for safety, and the euro actually rose.
The gyrations came amid news that Greek banks will stay closed for six days, and the country’s central bank has moved to impose capital controls, in a bid to prevent a severely battered banking system from collapsing completely.
Over the weekend, Greek Prime Minister Alexis Tsipras shocked European policy makers by announcing the country will hold a referendum on whether to accept the terms of Greece’s creditors to unlock desperately needed financial aid.
It now looks almost inevitable that Greece will default on a €1.54 billion ($1.69 billion) payment due to the International Monetary Fund on Tuesday. Much is at stake beyond the IMF’s balance sheet. What happens to Greece itself? What happens to the euro, a purportedly unbreakable currency union, and the Continent’s attempt to recreate itself as a global economic superpower? What happens in the capital markets, which have feasted on cheap debt and assumed all risks were contained?
via Recap: How Markets Reacted to the Turmoil in Greece – MoneyBeat – WSJ.