Spreadex Market Update
Eurogroup meeting gets underway as reports point to no resolution this week
The majority of reports coming out of the region suggest that a) a deal won’t be made today, and b) certain factions don’t really mind if this is the case. German magazine ‘Spiegel’ claimed that the ECB is preparing for a ‘Grexit’, whilst the Maltese finance minister stated that Germany is leading a cabal of countries that are ready to see Greece leave the currency union. Following the constant stream of reports leaking out of the Eurozone, the DAX briefly spiked to 11156; however this astonishing level was quickly lost as the realities of the situation set in once more.
The narrative that has arisen today very much confirms the idea that this issue is between Greece and Germany, with the other members merely picking sides at this point. The extensive leverage Germany has compared to Greece suggests there can be only one winner of this fiscal tug-of-war. What remains unknown is the form this victory will take.
In the face of these Eurozone wobbles, the FTSE maintained the slenderest of gains as the afternoon progressed. This was largely due to the stability its oil stocks found in the sustained $60 per barrel mark Brent Crude traded at, alongside impressive growth by Essentra and Serco. The FTSE is likely to close the week out around 60 points higher than it started; however, there is the sense that until this Greek situation is resolved its gains won’t be much more robust than this.
Finally, despite better than expected manufacturing data, the Dow Jones continued on its third consecutive day of declines. The index will have been affected by Barclays’ downgrading of Wal-Mart, as investors treated its wage-rise scheme with disdain. These losses also extended to the NASDAQ, which had previously been edging towards the much vaunted 5000 level, a mark it hasn’t hit since March 2000. After a largely mixed week, the US markets will be eyeing Janet Yellen’s testimony next week for any clarification of the perpetually discussed US interest rate hike that has become such a divisive topic of late.
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