Market strategist says: ‘This could probably be our worst day in two or three years.’ Photograph: Paul Miller/AAP
More than $35bn was wiped off the Australian stock market in the first hour of trading on Monday as investors brace for an increasingly likely Greek exit from the euro zone.
Both the S&P/ASX 200 and All Ordinaries quickly fell about 2%.
“Unfortunately this could probably be our worst day in two or three years – you’d probably be going back to 2011 or 2012,” an IG market strategist, Evan Lucas, said.
“It’s a very tough time and unfortunately nothing will be spared, except perhaps gold.”
The slide was spread across the market with banks, miners, retailers, healthcare providers and telcos all down sharply.
Gold stocks nudged ahead as investors sought out safe-haven investments.
Related: Greek banks to stay closed on Monday
The Australian dollar has fallen about three-quarters of a US cent since Friday and was trading at 76.3 US cents on Monday morning.
Australia is one of the first stock markets to react to the breakdown in talks between Greece and euro zone and IMF creditors at the weekend.
Japan’s Nikkei was down about 2%, and the Korean and New Zealand markets were more than 1% lower.
Lucas said the Australian market had little direct exposure to Greece, but traders were concerned about the fallout from a possible Greek debt default and exit from the euro zone.
Greece’s exit would raise fresh questions about fellow debt-laden EU countries, including Italy and Spain.
“It’s more about the fact that the contagion effect is not known,” he said. “There is not much you can point to in terms of how this will end and markets hate uncertainty.”
The talks between Greece and its creditors fell apart on Saturday when the Greek prime minister, Alexis Tsipras, announced a surprise referendum on 5 July on the proposed reform package put forward by Europe.
Greek banks will be shut on Monday and capital controls have been placed on ATMs amid fears of a run on the banks. Its stock market will also be closed.