Spreadex Market Update
Light afternoon for Greek info, whilst the Dow sees first 3 digit fall in July
The letter from Euclid Tsakalotos to the creditor cabal (well, formally to the ESM but more a statement of intent for the entire group to read) saw the new finance minister ask for a 3 year programme with the promise of ‘immediately’ implemented tax reform and pension related measures, the implied hastiness no doubt informed by the need to secure funds to pay the country’s impending ECB debts in July and August. This letter was the barest of bare bones, with Tsakalotos promising a fuller proposal on Thursday (fun!), meaning that with an unusual lack of dispatches from the Eurozone, the region’s indices could tentatively maintain whatever growth they had acquired since the open this morning.
The FTSE was similarly steady this afternoon, even if a surge during George Osborne’s Summer Budget couldn’t be sustained after the dust had settled. The budget contained important changes for the banking (the phasing out of the bank levy), retail (the introduction of a national wage) and housing sectors; the latter, especially, was negatively affected, with the tightening of rules on non-doms status sapping the life from the London-heavy housing stocks. Whilst the FTSE couldn’t hold on to its more robust gains, the mild recovery of the commodity sector meant the UK index avoided having to endure the recent drag it has seen from its hefty oil and mining stocks.
Whilst the European markets managed to bask in a (recently) rare moment of growth, the US markets couldn’t enjoy such a performance. A strong day for the dollar against the pound, if not the euro, alongside the continued confusion over Greece and the increasingly worrying, and panicked, trading in China all combined to cause the first 3 digit loss for the Dow Jones in July. In terms of US-specific news, the release of the latest Fed meeting minutes should shed some light on the current divisions within the central bank, and could cause some movements in regards to the Dow/dollar dichotomy in the (perhaps unlikely) eventuality of some juicy details being revealed.
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