Bank holiday

The tragedy of Friday's terrorist massacre on a Tunisian beach rendered inappropriate the use of the same word to describe the ongoing saga of the Greek debt crisis. Unavoidably though, the two events were the focus of world attention as another week of increasingly bitter negotiations and a breakdown in bailout talks culminated in the inevitable announcement that Greek banks would remain closed, and capital controls would be imposed, until after the surprise referendum called by the Greek government. These steps took the country nearer to the exit of the euro area, since a core rule of the eurozone is that there should be no restrictions on the movement of money or capital.

Late on Friday, Greek Prime Minister Alexis Tsipras announced a referendum for Sunday 5 July on whether to accept the latest terms being offered - five days after the final repayment of €1.6 billion to the International Monetary Fund (IMF) is due. Underlining the sense of chaos within the Greek government was news that its team of negotiators in Brussels only found out about Tsipras's call for a referendum via Twitter, just before midnight on Friday. Earlier that evening, Greek finance minister Yanis Varoufakis had sounded an optimistic note about a deal when interviewed by local television, and both sides were reaching agreement on a joint proposal to be presented to a meeting of finance ministry officials on Saturday. Unsurprisingly, the talks broke up after Tsipras's bombshell, delivered upon his return from week-long negotiations in Brussels.

This week's bulletin also includes:

  • Bail-out talks collapse again as Greek prime minister Alexis Tsipras surprises all parties with referendum announcement.
  • Greece teeters on the brink of default as 30 June deadline looms for repayment of IMA loan.
  • Opinion is divided on the likely result of the referendum and whether it will mean a Greek exit from the eurozone.
  • Last week's market optimism over a Greek deal goes into reverse, but market watchers believe contagion risk can be contained.

View this week's Market Bulletin, which contains thoughts and opinions of St. James's Place and our range of investment managers on the key issues affecting investors.

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