Good Ship Eurozone Now Sailing in Uncharted Territory

With the votes counted Greece (or at least two thirds of those who voted) raised a collective middle finger to its creditors, and the austerity they represent, with a dramatic ‘no’ vote victory on Sunday.

In doing so, the good ship Eurozone is now sailing in decidedly uncharted territory, with effectively no precedent set to provide guidance in this stickiest of sticky situations.

In somewhat of an understatement for Greece’s creditors, Dijsselbloem labelled the result ‘regrettable’, whilst Merkel and Hollande scrambled to put together their latest meeting, to take place this evening.

Tsipras, meanwhile, is convening his government to discuss what happens next, whilst in perhaps the most pressing development the ECB will decide whether to continue providing liquidity to the Greek banks.

These actions were fairly predictable; Yanis Varoufakis’ resignation, on the other hand, was slightly more surprising.

The Greek finance minister had already announced his intention to depart if the ‘yes’ vote prevailed.

But resigning in the face of what Varoufakis called a ‘majestic, big YES to a democratic, rational Europe’ was a bit more of a shock.

Yet it makes sense; Varoufakis himself states that he was made aware’ that certain factions in the grand landscape of European leaders would rather him not be there at the negotiation table, and if Tsipras is serious about seeking a new deal, as assumedly he is, then the removal of his fiery finance minister goes to way to easing the tensions that will have exacerbated following the referendum result.

All in all, given the potential ramifications of this ‘no’ vote, the markets dealt fairly well with the news.

Of course, they slipped into the red, but given the haemorrhaging that happened when the referendum was announced last week, this morning’s losses are rather tame, especially for an index as volatile as the DAX.

The FTSE managed to mitigate its losses after the bell, despite a tumble by the banking sector following fears of a Greek banking crisis emanating from the continent.

Add in the China-inspired, and hefty, losses for the mining sector as copper fell by around 3%, and the FTSE has escaped this morning’s events fairly unscathed. For now, at least.