US stock markets fall after Greek vote

American stocks took a tumble today after Greek voters resoundingly rejected the austerity measures required by the country's creditors as a precondition for a new bail-out.

US stock-index futures fell overnight as the result of the referendum became clear, and in early trading in New York, stock markets followed the pattern of falls that had been established by Asian and European markets.

The Standard & Poor's 500 Index extended its steepest weekly slump since March, Bloomberg reports. After an hour of trading, the S&P had fallen by 0.5 per cent and the Dow Jones Industrial Average by 0.6 per cent.

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Futures in both indexes fell by a greater margin, indicating that traders believe the markets have further yet to fall.

After 61.3 per cent of Greeks voted No in Sunday's referendum, renewed fears that Athens will leave the euro sent markets into jitters around the globe. In London, the FTSE 100 was down 87 points or 1.3 per cent at 3.15pm.

Leading lenders, including JPMorgan Chase & Co., say a Grexit is now the most likely scenario.

Analysts are divided over what will happen next on Wall Street. Equities vice-chairman at Robert W Baird & Co, Patrick Spencer, says: "The uncertainty around Greece and the outcome are the factors really hurting US futures – markets hate uncertainty. There's too much at risk if the Greeks leave the euro."

However, USA Today reports that Paul Hickey, co-founder of Bespoke Investment Group, has told clients not to be alarmed. "There's been no panic of any kind," he said. "Broadly speaking, we think every single market is acting quite rationally."

Meanwhile, news that American employers added fewer jobs than expected last month has dampened expectations that the Federal Reserve will feel confident enough to raise the cost of borrowing in September.

The 223,000 new jobs added to the economy last month fell short of the 230,000 expected by many economists, said The Times this morning. A further dent in confidence came when the job gains for April and May were revised downward by 60,000 jobs, and wage growth was flat for June.