Portugal’s PSI120 stock index closed 5.22% down this afternoon at 5,530.50 points in a Europe-wide reaction to uncertainty in Greece.
Portugal’s main index performed the worst among its European peers all of which ended the day sharply lower with losses varying between 1.97% in London, 4.56% in Madrid - even Frankfurt was down 3%.
Interest rates on Greek bonds continue to rise causing collateral damage to weaker European countries and a decline in rates in German bonds as investors seek refuge from the financial storms ahead the coming referendum.
As Greece suffers, the German government is able to access cheap funding as German debt is considered the safest such asset in the eurozone, driving its price down.
The Greek stock exchange is shut and will remain so until July 7.
The probability of a Greek default is already being reflected in the price of Greek bonds traded on the open market with ten year debt at an unsustainable 15%+, up 38% in just two years.
In Portugal, the interest payable on two and ten year bonds are both up as is the interest on Spanish government debt.
Assurances from Portugal's government that 'what happens in Greece, stays in Greece' already are proving to be false as Europe starts to reset its financial machine as if Greece already had defaulted.
