People stand in a queue outside a bank which operates on Saturday but eventually didn’t open, in central Athens, on June 27, 2015. (AP Photo/Thanassis Stavrakis)
[SEE: Greek Banks Close for 6 Days as Debt Crisis Deepens]
European Stocks, Bonds, Euro Seen Falling After Shutdown of Greek Banks
By Josie Cox
European bonds and stocks were expected to slump Monday, after Greece over the weekend shut banks and imposed capital controls in a bid to prevent a severely battered banking system from collapsing completely.
The euro slumped to a more than three-week low of $1.0950 during the Asian trading session. It was trading at $ 1.103 in early European hours, according to FactSet, down 1.18%.
European stock markets were expected to fall around 4% at the open, according to traders.
Moves in bond markets were expected to be similarly sharp, especially across southern Europe–the region most sensitive to any contagion from Greece.
On Sunday, the Greek parliament approved a referendum for July 5 on whether to accept austerity measures demanded by the country’s creditors in exchange for further aid.
That came after eurozone finance ministers in Brussels on Saturday rejected a Greek request for a one-month extension to its bailout.
Greece now looks set to default on its EUR1.55 billion ($1.73 billion) payment to the International Monetary Fund on Tuesday.
“The Greek debt crisis really is a ‘crisis’ now,” Société Générale strategists wrote in a note early Monday.
Nick Lawson, a senior managing director on Deutsche Bank’s equities team in London said that whatever the outcome of the referendum, the uncertainty in markets will last for a long time.
“With a default now firmly on the cards, markets everywhere face a very testing start to the week,” said Ian Williams, economist and strategist at brokerage Peel Hunt.
Write to Josie Cox at josie.cox@wsj.com
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