European stocks fell after Greek voters rejected creditors’ austerity demands, while a measure of volatility slid amid speculation that the resignation of Finance Minister Yanis Varoufakis will smooth further talks.
The Stoxx 600 retreated 1.2 percent to 378.68 at the close of trading, after earlier losing as much as 1.6 percent. That compares with the 2.7 percent drop of June 29, the first trading day after Greek Prime Minister Alexis Tsipras announced the vote on austerity conditions. The VStoxx Index of volatility expectations for the Euro Stoxx 50 Index slipped 7.1 percent today. The volume of shares changing hands on the Stoxx 600 was 13 percent higher than the 30-day average.
“Greece is not a driver of the equity market as it was in 2012,” said Tristan Abet, a strategist at Louis Capital Markets in Paris. “Today in 2015, there is no longer systemic risk. The ‘cyclical upswing’ in the rest of Europe is intact and inflation rates are recovering. It is not really necessary to buy protection because markets are resilient.”
Montaigne Capital fund manager Arnaud Scarpaci said Varoufakis’s resignation will help negotiations toward an eventual agreement with creditors. The finance minister announced the decision in a blog post early Monday, saying there was “a certain preference” among European creditors that he no longer be involved in talks.
Spain’s IBEX, Italy’s FTSE MIB and Frances’ CAC 40 entered corrections, falling more than 10 percent from their April highs. Portugal’s PSI 20 Index dropped 3.8 percent to its lowest level since Feb. 16. Banca Monte dei Paschi di Siena SpA dragged a gauge of European lenders to the worst performance on the Stoxx Europe 600 Index, with a 12 percent slide.
The Greek exchange has been closed since June 29 as the country shut its banks and imposed capital controls to shore up its financial system. A U.S.-listed exchange-traded fund tracking Greek stocks fell 8 percent as of 11:50 a.m. in New York, while American depositary receipts of National Bank of Greece SA plunged 13 percent.
Sixty-one percent of Greek voters backed Tsipras’s rejection of further spending cuts and tax increases in Sunday’s referendum. An emergency summit of European leaders has been called for Tuesday, while Chancellor Angela Merkel heads to Paris on Monday for talks with President Francois Hollande.
The Stoxx 600 lost 3.4 percent last week, the biggest weekly loss this year, after Tsipras announced the surprise referendum. The equity benchmark has fallen 8.5 percent from its high this year.
While JPMorgan Chase & Co. cut its rating on European stocks to the equivalent of a hold from a buy, it said it doesn’t expect a selloff of the scale of what happened in the past. In 2010, when Greece received its first bailout, the Stoxx 600 tumbled as much as 15 percent in less than six weeks.
Among stocks moving on corporate news, Rolls-Royce Holdings Plc tumbled 6.3 percent after cutting its full-year profit guidance and halting a share buyback to preserve cash.