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The Oxis have it

Published Monday, July 6th, 2015

The country often described as the cradle of democracy rallied behind its leaders over the weekend as Greek voters overwhelmingly rejected bailout proposals put forward by international lenders in Sunday’s historic referendum. Opinion polls leading up to the crunch vote had predicted a close fought contest but the outcome saw the NO contingent secure a damning 60% of the vote in a move which has thrown doubt over Greece’s future in the currency-bloc.

The confirmation of Alex Tsipras’ mandate to rid the nation from the shackles of austerity has set the scene for a showdown with European officials as we enter unchartered territory with the prospect of a Gexit taking one step closer to becoming reality. Immediate concerns will be focused on Greece’s embattled banks which have seen their cash reserves slump and are teetering on the brink of insolvency. Financial support from the ECB can no longer be taken as a given following this weekend’s events and neither can assumptions by the Greek leadership that talks will resume despite the rebuttal of creditors’ demands. One notable omission from the Greek delegation should they be welcomed back in Brussels for discussions will be Yanis Varoufakis, Greece’s belligerent finance minister, who resigned this morning. This decision could be seen as an effort to pacify the country’s lenders who he accused of terrorism shortly before voting got under way.

In a week which saw Greece fall into arrears with IMF loan repayments, global equity markets were once again at the mercy of developments in the eurozone with choppy trading eventually seeing falls across the board. The FTSE 100 slipped 2.5%, Germany’s Xetra Dax lost 3.8%, US stocks fell 1% into the red and China’s Shanghai Composite suffered a hefty 12% loss. The sharp fall in Chinese stocks has seen the Shanghai index lose more than 20% since mid-June after doubling in value in the seven months from November last year and has prompted an investigation  by its regulators. The prevailing risk-off environment has been maintained this morning as all major indices lose further value with only supportive measures announced by Beijing preventing another slump on Chinese bourses.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.