FTSE 100 significantly lower as Greece rocks the European markets

Stock markets this morning are rocking in the aftermath of the developments in Greece over the weekend and the decision of the Greek government to keep its banks closed for the week ahead. The situation in Greece looks grim and with the country staring into the abyss after months of negotiations the money markets are responding to the now very real threat that a Eurozone member might have to leave the union for the first time.

The FTSE 100 has opened significantly lower this morning and has dropped as low as the 6,560 points as the possibility that Greece will exit the Eurozone seems very real. The Greek Prime Minister has announced that the country will hold a referendum this Sunday with the question being whether the country will accept or reject the latest agreement terms proposed by the ECB, the IMF and the European Union.

It goes without saying that the European markets will be focused on any developments from Greece and there are rumors that efforts are being made for the situation to be resolved much sooner than Sunday’s referendum. The next part of the drama however might be played on Wednesday as Greece’s current program ends and the IMF and ECB could ask from the country to repay the loans that they have undertaken all this time.

From my point of view, as long as this situation continues without a glimpse of hope the stock markets will remain under pressure. The FTSE is trading higher at this time having recovered from this morning’s lows and seems to have found some support around the 6,660 points. Nevertheless as soon as the US markets come online we could see another round of bearish pressures and I believe that the important support level lies around the 6,600 points.

If this level holds then we should see a consolidation effort between the 6,600 and 6,700 points waiting for fresh news out of Greece and the efforts undertaken behind the scenes to find some common ground. Otherwise the FTSE could again dive lower and the 6,550 points lows will be revisited with the view to go even lower. My advice is to be very careful and quick in your trades as we’re now treading uncharted waters.

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