Greece 'No' vote hits euro to US futures amid flight to safety, Singdollar down 0.4%

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Official figures show a whopping 61 per cent of Greeks rejected the terms of a bailout, risking financial ruin in a show of defiance that could splinter Europe.
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Greek Finance Minister Yanis Varoufakis says with a resounding No, Greece can now ask for a fair deal from international partners.
A woman supporting a 'No' vote in the Greek referendum, holds a Greek national flag as she celebrates at Syntagma Square in Athens. PHOTO: AFP

WELLINGTON (BLOOMBERG) - The euro fell with high-yielding currencies, while U.S. stock futures and crude oil slid as the shock waves from Greek voters' rejection of austerity started moving through financial markets. Demand for haven assets fueled gains in Treasury futures and gold.

The euro fell 1 per cent to US$1.1009 by 7:26 a.m. Tokyo time, retreating against all 16 major peers. The Australian dollar broke below 75 U.S. cents for the first time since 2009, even after China stepped up efforts to arrest a stock selloff. Standard & Poor's 500 Index futures slid 1.4 per cent and Japanese index futures also dropped. U.S. oil tumbled 3.5 per cent and copper futures fell. Ten-year Treasury futures rose to the highest level since June 1 as gold added 0.4 per cent.

With more than 95 per cent of the ballots counted, Greeks have voted 61 per cent against austerity measures required to win another bailout package, according to figures posted on the Interior Ministry's website. The results mean Greece exiting the currency union is now the base-case scenario, JPMorgan Chase & Co. said. China suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the steepest plunge in local equities since 1992.

"There's a whole range of unpredictable outcomes," said Mark Lister, head of private wealth research at Craigs Investment Partners Ltd.. "It's surprising that the 'no' vote won so convincingly, certainly more decisively than the polls had suggested. This puts us in limbo for so much longer and it's very negative for risk sentiment especially when you add in what we're seeing with developments out of China."

Some 39 per cent voted "yes" in the referendum, according to results. An opinion poll commissioned by Bloomberg showed 43 per cent of voters in the "no" camp and 42.5 per cent voting to accept creditors' conditions. The survey had a three percentage- point margin of error.

Nikkei 225 Stock Average futures denominated in yen slipped 1.6 per cent in Chicago, to 20,165. Futures on the Dow Jones Industrial Average and the Nasdaq 100 Index were also down more than 1.3 per cent from their close Thursday. American markets resume Monday following a holiday Friday.

Yields on 10-year Treasury notes could slip to 2.25 per cent or less on a 'no' vote, said David Ader, head of government bond strategy at CRT Capital Group LLC. Rates on benchmark U.S. debt closed at 2.38 per cent when they last traded July 2.

"This is a big surprise, the market definitely expected it was going to be close," said Clem Miller, an investment strategist at Wilmington Trust. "We're going to see a lot of volatility. Everything's going to get hit with the exception of safe-haven bonds."

German Chancellor Angela Merkel and French President Francois Hollande called for a summit of euro-area leaders to be held July 8. The result of the referendum is "to be respected," the German government's press office said in an e-mail. European Union President Donald Tusk confirmed a meeting will be held Tuesday in a Twitter post.

The euro could drop toward $1.08 initially, before targeting a 12-year low of $1.0485 last reached March 16, said Robert Rennie, the global head of currency and commodity strategy at Westpac Banking Corp. in Sydney.

Gold rose to US$1,173.09 an ounce in the spot market, while silver added 0.3 per cent to $15.7470 per ounce.

The yen, also regarded as a haven, gained against all major currencies Monday, rising 0.3 per cent to 122.38 per dollar. The currencies of South Africa and Turkey slipped at least 0.8 per cent against the greenback, and Canada's dollar lost 0.2 per cent.

The Singapore dollar was down 0.4 per cent.

While Greece accounts for less than 2 per cent of the euro zone's output, an exit would set a precedent for other nations that membership is reversible. The country's immediate fate lies with the European Central Bank, which may take its cues from European Union leaders as to whether it can keep emergency loans flowing to Greece without the prospect of a bailout package.

The Greek government's decision to call a snap plebiscite on creditors' demands spurred a deepening in the nation's financial crisis, with capital controls imposed and the country unable to make a scheduled payment to the International Monetary Fund last week. Finance Minister Yanis Varoufakis had said he would quit if the country voted to endorse the austerity plan.

"Most imminently, Greek bank ELA liquidity is likely to be fully exhausted over the next few days, leading to an exhaustion of ATM cash reserves as well as an inability to finance imported goods via outgoing payments," George Saravelos, co-head of currency research at Deutsche Bank AG in London, wrote in an e- mail, referring to the ECB's Emergency Liquidity Assistance program.

In China, 28 companies halted their IPOs, according to filings to the nation's two exchanges Saturday. A group of 21 brokerages led by Citic Securities Co. will invest at least 120 billion yuan in a stock-market fund, the Securities Association of China said the same day. Executives from 25 mutual funds vowed to buy shares and hold them for at least a year, according to an industry group association.

The weekend announcements come as the government battles to restore faith among the nation's 90 million individual investors after a slew of measures by regulators, including a pledge to investigate market manipulation, failed to stem declines.

"Declines of such a magnitude are enough to trigger a financial crisis and the issue is now elevated to state level," said Li Jingyuan, general manager of the securities investment department at Shanghai Zhaoyi Asset Management. "It's about restoring confidence now."

The Shanghai Composite Index, one of the world's best- performing equity gauges the past six months, has tumbled 29 perc ent since mid-June, erasing about US$3.2 trillion of value from the market on concern leveraged traders are liquidating bets after valuations exceeded levels seen during China's stock- market bubble of 2007. Singapore-traded FTSE China A50 Index futures added 0.1 per cent in most recent trade.

The yuan was little changed in early offshore trading, slipping less than 0.1 percent to 6.2077 per dollar.

West Texas Intermediate crude slid to US$54.65 a barrel, headed for its lowest close since April 15. Brent crude dropped 1.5 per cent to US$59.41 a barrel, trading below US$60 for the first time since mid-April.

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