US open: Dow tumbles over 120 points as Greece teeters on the brink

US stocks plunged early on Monday, as Asian and European stocks slid in the wake of the latest developments in Greece.

Just before 15:00 BST, the Dow Jones Industrial was down 126 points to 17,821.03 while the S&P 500 and the Nasdaq dropped 19 and 61 points respectively.

Greece on the brink

European stocks tumbled, as the Greek debt saga took a turn for the worse, with capital controls now in place to prevent the country’s banking system from collapsing.

Greek Prime Minister Alexis Tsipras has called for a referendum on 5 July so the people can decide whether to accept the terms of the bailout being offered by international creditors.

Meanwhile, European finance leaders have refused to extend Greece’s bailout beyond Tuesday and the European Central Bank has frozen its emergency liquidity assistance to the debt-ridden country.

"The problem is the timing of the referendum, with the announcement coming only a few days before a large unfunded repayment is due to the IMF," said Oanda's senior market analyst Craig Erlam.

"If this referendum goes ahead, Greece will default on this payment which could have easily been avoided."

Despite the concerns surrounding Greece's future, the euro surged 1.4% against the dollar. The greenback fell 0.27% against the pound and gained 0.26% against the yen, while gold futures climbed 0.45% to $1,178.50.

Elsewhere, Asian stock markets closed with heavy losses, with Chinese equities in bear-market territory, as fears about Greece hammered investor sentiment.

Not even an interest rate cut by the People’s Bank of China couldn’t halt the slide on stock markets in Shanghai

"Beijing is battling to keep investor confidence high, but the latest interest rate cut wasn’t enough to prevent a bear market," said IG's analyst David Madden.

"Once the sentiment turns sour it is difficult to regain it, and the sea of selling overnight in the Far East couldn’t have come at a worse time now that Greece is a day from defaulting."

Oil prices tumbled, with West Texas Intermediate losing 1.93% to $58.50 a barrel, while Brent dropped 2.05% to $61.99 a barrel.

Banks bear the brunt

In corporate news, the Greek crisis weighed heavily on the US banking sector, with Citigroup and JP Morgan losing 1.56% and 1.68% respectively, while Goldman Sachs fell 1.46%.

General Electric slid 0.89% after announcing it will sell its US, Mexico, Australia and New Zealand fleet businesses to Element Financial for $6.9bn. -