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Monday 23 January 2017

Asian stocks tumble, euro falls after Greek 'No' vote

Published 06/07/2015 | 06:58

Anti-austerity ‘No’ voters celebrate the results of the first exit polls in front of the Greek parliament in Syntagma Square in Athens last night
Anti-austerity ‘No’ voters celebrate the results of the first exit polls in front of the Greek parliament in Syntagma Square in Athens last night

Asian stocks hit a six-month trough and the euro stumbled on Monday after a Greek vote against austerity measures endangered its future in the single currency and raised the risk of a full-blown crisis in the euro zone.

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A rush from risk took MSCI's broadest index of Asia-Pacific shares outside Japan down 2.8pc in the steepest daily drop in two years.

Japan's Nikkei shed 2.4pc, while US equity futures dropped 1.3pc. Early signs were the major European bourses would open down at least 2 percent.

China's stock market tried to buck the trend following a salvo of rapid-fire support measures from Beijing over the weekend.

Yet after an early surge stocks soon flagged and the CSI300 index of the largest listed companies in Shanghai and Shenzhen was up just 0.5pc. The Shanghai Composite Index was flat having been up over 7pc at one stage.

While the price action was whippy across Asia, dealers emphasised that markets were orderly with few signs of financial strain and many assuming the European Central Bank would step in with a pledge of extra liquidity at some point.

The Japanese government said it was ready to respond as needed in markets and was in close touch with other nations.

"A lot depends now on what the ECB does with liquidity support for the Greek banks," said Antonin Jullier, head of equity trading strategy at Citi. "The ECB has the capacity to limit the spread of contagion."

The euro lost half a percent to $1.1064 and 0.6pc against the safe-haven Japanese yen. It fell as low as $1.0967 in Asia before rebounding, taking some support from the resignation of Greece's outspoken finance minister, Yanis Varoufakis.

The FTSE 100 Index dropped 73.3 points to 6509.5 today after Greece voted to reject the terms of the international bailout.

Reuters

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