Australian Markets Tumble On Greek Referendum News

Australia’s stock markets tumbled early Monday amid worldwide shock from the Greek referendum results. The Australian dollar hit a six-year low of U.S.$0.7454 before recovering later in the day, although it still remained volatile.

The ASX 200 fell by 1.77 percent in early trading, reaching a low of 5,436 points before rebounding. The Australian dollar was already weakened last week by a 6 percent drop in the price of iron ore, the country’s biggest export.

On Sunday, Greeks voted in a referendum to reject austerity reforms that Greece’s international creditors had called for in exchange for critically needed bailout funds. Analysts say that the "No" vote makes Greece’s departure from the eurozone, or “Grexit,” more likely.

Australian financial officials expressed concern over how long the current uncertainty would last. “It could be a long time. We lurch from one near-death experience to the next,” Ric Spooner, CMC Markets' chief market strategist, told the Guardian.

"The 'no' vote is the worst possible outcome from an uncertainty perspective," Ray Attrill, National Australia Bank's global foreign exchange strategy head, said on Monday, according to the Sydney Morning Herald. "It is hard to challenge the appropriateness of the euro-U.S. dollar continuing to trade sub-$U.S.1.10, the Aussie south of U.S.75¢, and the Aussie-yen [trading] sub-¥92 on sharply higher market risk aversion."

Investment bank JPMorgan Chase & Co. upgraded the chances of a possible Grexit to two-in-three from its initial prediction of one-in-two. “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,” the bank said in a memo.

European markets also dropped on the referendum news, with the euro dropping 1.3 percent in early trade. Analysts reportedly expected heavy purchasing of Swiss francs and Japanese yen.

Asian markets were also weakened by the "No" vote. India's benchmark stock index, the BSE Sensex, fell by over 300 points, dipping below the psychological 28,000-mark in early trading on Monday.

Eurozone countries will now hold an emergency summit on Tuesday to determine Greece’s fate.