Europe’s financial markets took a few hits in early trading after Greece announced a shut down of the country’s banks and stock exchange.
Shares plunged in London, Paris and Frankfurt, but after early volatility the markets settled and recovered some ground.
EU bank shares suffered, losing €40bn of market value with Portugal, Spain and Italy posting a collective loss of €18.2bn.
Euronews correspondent Sasha Vakulina got the market lowdown on today’s trading.
Sasha Vakulina:“We’re now joined by Angus Campbell, senior analyst at FxPro.
After a weekend of Greek drama, Asian and European stocks have slumped on Monday. The euro fell against the US dollar.
Angus, was the markets reaction better or worse than expected?”
Angus Campbell:“Well, I think it was to be expected, it was neither worse or better. But actually the subsequent market movements since the open of the European session have been a little bit better than expected, I would say. Because markets have rallied from their lows and in particular the euro has actually recovered some of its earlier losses. But I think that really it’s too early to suggest that any further downside to risk assets to the euro has been totally eliminated and any reduction in volatility.”
Sasha Vakulina:“Without further increases in ECB emergency funding to Greek banks, how contagious could the Greek banking crisis be for the rest of the eurozone, and for the peripheral countries in particular?”
Angus Campbell:“Well of course, it’s very important that contagion is avoided. Things are very different to the previous crisis of a few years ago when Greece negotiated its second bailout and debt write-downs. The eurozone is a very different place in terms of risk to Greece and overall debt burdens for many peripheral nations.
So I think contagion is probably overestimated, although there is still that risk and we have seen that today from the markets, because of course the borrowing costs, Spanish, Italian, Portuguese debt has risen.”
That was Angus Campbell. senior analyst at Fx Pro, thank you.