Australian Investment Blog

While the counting is not complete, the result appears a foregone conclusion with the “No’s” winning a resounding majority. As we have said recently, it was not a matter of if, but when Greece would leave the Euro, that time appears closer than many anticipated. We believe the real issues for the Euro will emerge if any problems arise in the future, from the low hanging fruit - Italy, Portugal and Spain. This week will definitely be a test of the markets belief that Central Banks can continue to be supportive in the face of adversity. All eyes are on the US S&P futures which have just opened down 1.5%, a negative indication for the ASX200 early today. The Euro currency is currently relatively controlled this morning, down only 1%, and 5% above the recent lows – see chart 1. Technically we still expect the Euro to fall at least 5-10% from current levels, implying further weakness in equities. The “the little Aussie battler ($A)” is already feeling the negative sentiment, trading at levels not experienced since May 2009 – see chart 2. As major uncertainty hits equity markets investors simply need to stand back and remain focused.