As Greece is determined to hold a referendum on the austerity measures and the bailout plan, European leaders are considering to pull Greece out of the euro-zone if Greek voters will reject the rescue plan.
Chancellor Angela Merkel and French President Nicolas Sarkozy held emergency talks with Papandreou yesterday ahead of the G20 meeting on Thursday and Friday in Cannes,France.
“The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no”, said Merkel after the talks. Sarkozy said Greece will not get a “single cent” if Greek voters will reject the plan.
If voters will reject the plan is will also lead to Greece’s default, which will cause massive losses for banks that hold Greek bonds, and could send Europe into recession.
The Feds said yesterday the economy “will expand modestly” and for now they wont take any steps to help the economy, however left the door open for more steps if the situation requires, yet they revised their growth projections lower.
Losses were seen across the stock markets today, where the MSCI Asia Pacific Index excluding Japan fell today by 1.3% at 15:03 inHong Kong. Japanese markets are closed for a national holiday.
As Europe’s outlook is uncertain and pessimism dominates the global financial markets, European stocks fell today, where FTSE 100 fell 0.19% while DAX fell by 0.59% as of this writing, while CAC 40 is almost unchanged from the opening.
Losses however were limited in China, although the economy reported a disappointing PMI non-manufacturing, yet signs indicating China is ready to ease its monetary policy if needed eased some of the fears.
Markets will remain nervous and risk aversion will be high ahead of the vote and before the European Central Bank rate decision followed by Mario Draghi’s first press conference as ECB’s president.
Economic data from Europe will be limited to ECB’s decision, however eyes will turn to the US, since the economy will release the weekly unemployment claims as well as factory orders and the ISM non-manufacturing for Oct.
UK released a worse than expected PMI services report today falling to 51.3 in Oct. from 52.9 in Sep., while Australia released the retail sales for Sep. which came inline with expectations of 0.4%.
Awaiting for more clues, markets are moving in tight ranges today, where the euro is almost unchanged trading at 1.3555 as of this writing while the pound is at its opening levels at 1.5945.
The dollar index is trading in a tight range around 77.00, while the yen is around the opening of the day at 78.00. The AUD weakened trading around 1.0280 after is reached the highest today of 1.0347.
Pessimism over the outlook of the global recovery fueled some negative momentum in the commodity markets, where oil is moving to the downside around $92.25 per barrel level, while gold is almost unchanged at $1735.30.
