Stock Markets Plummet As Greece Heads To Default

The debt crisis dominated the news over the last few days as the Greek government opted to shut down its banking system and stock market, causing shares plummet worldwide yesterday. As it currently stands, negotiations between Greece and its creditors have failed over the weekend after Greek Prime Minister Alexis Tsipras surprised creditors with a call for a referendum on whether to accept reform measures demanded by creditors. The Greek parliament approved the motion, and it will be held on July 5th. Shares in the U.S. Europe and Asia saw significant declines that are bleeding into today already except for Asian shares which have recovered somewhat. The German DAX and French CAC 40 both declined between 3.6 and 3.7% to close yesterday’s session at 11,083.2 and 4,869.82, respectively. This decline marked the indexes’ sharpest decline since late 2011. Spain’s IBEX 35 tumbled a whopping 4.6% to trade at 10,853.9 while the UK’s FTSE managed limit losses to 2%. The STOXX 600 had its sharpest decline since October this year with a 2.6% decline to 386.43.

However, losses were certainly not limited to Europe. U.S. shares got hammered as both the Dow Jones industrial average and the S&P 500 suffered record-breaking declines. The S&P 500 index fell 2.1% to trade at 2,057.64, bringing the index into the red for the 2015 in its sharpest decline in over a year. The index fell below a key technical support level, leading many analysts to suggest that further losses are likely underway. The Dow Jones Industrial Average tumbled nearly 2% to trade at 17,596.35, marking the index’s biggest drop in more than two years. Finally, the tech-heavy Nasdaq composite index fell 2.4% to trade at 4,958.47.

The recent days have been especially hard on the euro. The majority of declines came mid-week when it was clear that negotiations would not be reach a resolution that would allow Greece to make its payment due today. The euro declined 1.66% against the dollar last week and has since continued to steadily decline. Currently the EUR/USD is trading at $1.1187, down 0.46% today alone. At this point, it seems guaranteed that the euro’s trials have not yet concluded as the Greek drama continues to unfold.

Despite the fundamentals revolving mostly around Greece, a number of important economic data reports will be released this week. UK and Canadian GDP data is scheduled to release today. The U.S. nonfarm payroll report will be released on Thursday, detailing the number of jobs added to the U.S. market. Considering the data-driven position of the Federal Reserve, this report could impact the likelihood of an interest rate hike in the coming months.