Spreadex Market Update
Market mayhem as flurry of Greek dispatches cause big movements across the board
Whilst the latest news from Greece’s creditors suggests they are approaching agreement on the terms of a proposal to submit to the country, Greece itself maintains it is in the dark over what is contained in said proposal. Eurogroup chief Dijsselbloem has been decidedly bearish about chances of a deal before Friday, claiming it isn’t ‘theoretically possible’ this week. However, to add to the confusion, this could be referring to any deal that needs to be signed off by the Eurogroup rather than the ‘political deal’ that has been kicked about for most of Tuesday.
Yet regardless of the hopes of some members of the creditor cabal, Dijsselbloem is likely right to be sceptical about the short term chances of a deal. Disparity remains between the individuals that make up the Greece’s creditors, between the interior of the Greek government itself (with rumours persisting of a snap election at the end of June) and, most importantly, between Greece and those institutions that hold the country’s fiscal future in their hands.
The reality is that a lot of ground still needs to be covered, and conversations need to be held that, despite the length of this saga, can’t, and shouldn’t, be rushed. Nevertheless, the euro-dollar went on a tear off the back of these murky hopes, much to the displeasure of the DAX and the rest of the Eurozone indices.
The FTSE initially joined in with the more excessive losses seen in the Eurozone this afternoon; however, the muscular performance by the euro and the pound against the dollar caused fairly sizable gains for the UK index’s commodity stocks, in turn helping to drag the FTSE away from the precipitous declines seen earlier in the day.
Despite the lack of credibility behind a flurry of bomb threats to US airlines this afternoon, the news still managed to prevent the US markets from fully enjoying the spanking the dollar received by the pound and the euro throughout Tuesday. However a negative factory order figure, and comments from the Fed’s Lael Brainard suggesting that the US won’t see a significant bounce back in the second quarter, helped the US markets entertain the idea of gains as the day went on.
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