More than $30 billion has been wiped off the Australian stock market as fears grow that Greece is headed for a messy exit from the euro zone after the country rejected its creditors’ proposed austerity measures.
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The ASX/S&P200 and All Ordinaries fell by 1.7 per cent in early Monday trade in response to the resounding ‘No’ vote to the austerity measures, which many see as a vote against the country’s membership in the euro zone.
Meanwhile, the Australian dollar dropped to a six-year low of 74.52 US cents before recovering slightly.
Greeks delivered a stunning rebuke to Europe at the highly-anticipated referendum overnight, with 61 per cent backing the ‘No’ campaign advocated by the ruling Syriza campaign.
The move caught markets by surprise and significantly increased expectations Greece would leave or be forced out of the euro zone.
Investment bank JP Morgan now says there is a two-in-three chance of the country leaving the euro zone.
‘‘This is a path that suggests to us that there is now a high likelihood of Greek exit from the euro, and possibly under chaotic circumstances,’’ it said in a research note.
Every sector of the Australian market was deep in negative territory, with the exception of gold miners.
Gold tends to do well during times of uncertainty due to the metal’s reputation as a ‘‘safe haven’’ asset.
IG Market strategist Evan Lucas said the market sell off would be considerably worse if not for expectations that Chinese stocks will rally following the announcement of new emergency measures.
The country has moved to prop up its ailing share market, which has lost 26 per cent in the past fortnight, by suspending new listings and enlisting the help of its top stock brokers, which have agreed to collectively buy at least 120 billion yuan ($A25.56 billion) of shares.
‘‘Clearly China has got every reason to have a positive day today, if it is not supported today then we’ve got some serious problems,’’ he said.
AAP