Spreadex Market Update
Greek inertia drags markets down at start of latest crunch week
Granted, at the moment every week is crunch week for the indebted country, especially since the most recent negotiations over the weekend unsuccessfully ended in less than an hour. Head negotiator Tsakalotos claims Greece tried to meet creditors ‘half-way’, but it is increasingly clear the Eurozone’s key members aren’t willing to compromise any more.
That, or they are just as divided internally as they are with Greece as IMF chief economist Blanchard’s call for some form of Greek debt relief was countered by claims from German MPs that the country needs to get ‘back to reality’. ECB President Draghi is set to talk this afternoon, and whilst he is unlikely to provide a completely honest answer, his tone over Greece should be telling. In all of this inertia inspired volatility, with the DAX suffering 3 digit declines immediately after the bell, the German Bunds has become the this morning’s safe haven. However given the uncertainty in the bond market of late it will be interesting to see how long that lasts.
The FTSE fell in line with the Eurozone this Monday morning, slipping to its usual less extreme losses as the crisis on the continent continues to grow. However this week could see a change in the UK index’s behaviour; Tuesday to Thursday sees a string of important data for the UK, a string of data that could help loosen the FTSE’s current ties to the ongoing (non)action in Europe.
Despite the latest copper slump, which has seen the metal tumble to its lowest price since April and a long way from the highs of May, Vedanta Resources has continued its robust performance this morning following the confirmation of its India-subsidiary merger plan. By bringing together Cairn India, the company’s oil exploration division, alongside Vedanta Ltd, its Mumbai-listed holding company, Vedanta is eyeing a £1.7 billion windfall to ease its debts. Unsurprisingly, the confirmation of this already popular move pushed Vedanta Resources to a 2 and a half week high.
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