Greece’s stock market opened for business today after five weeks of suspended trading. As was to be expected, shares fell—a lot—because Greece’s economy has been absolutely whomped by the recent fallout from its debt crisis, and it’s still not 100 percent certain the country will strike a deal to stay in the eurozone. Initially, the Athens Stock General Index dropped 23 percent, which … ouch.
But then it began to recover, and by the end of the day, it finished just 16 percent lower. Now, that’s still an enormous decline—the Dow Jones has only fallen by that much once in its entire history, on the Black Monday crash of 1987.* But if you think about it, that might be a vote of confidence from investors. After all, that’s five weeks of built-up angst released in one trading day. Given everything that transpired this past month, when the whole Greek economy was basically frozen stiff thanks to a combo of capital controls and bank shutdowns, a 16 percent drop isn’t unreasonable (a major survey showed that Greek manufacturing output imploded in July, hitting its lowest level on record). At the same time, it doesn’t seem like a situation where panicked investors are simply running for the doors because they’re extremely worried a final deal to stay on the euro won’t come through. So, weirdly, today might be a vote of confidence from the markets: Greece’s economy is probably screwed, but it’ll probably be screwed as a member of the euro.
*Correction August 3, 2015: This post initially misidentified Black Monday as Black Friday, because I’ve apparently been ruined by retail.