Spreadex Market Update
Pre-referendum jitters force markets in the red
Wolfgang Schauble spent the afternoon countering Yanis Varoufakis’ claim that there would be a quick deal following the referendum by stating that a ‘new basis’ for a deal would be needed, even in the case of the ‘yes’ vote prevailing. Schauble also reminded anyone who has clung to whatever shrivelled remnants of optimism they have left that the Bundestag, hardly Greece’s biggest fan at the moment, would have to vote to approve any new bailout.
There has also been remarkably little comment from the creditor side of the divide on the IMF report from Thursday that labelled Greece’s debt ‘unsustainable’. Dijsselbloem provided the only real remark, calling the IMF’s analysis models ‘outdated’ in a dismissal that suggests the Washington-based institution’s report hasn’t been as seismic as Greece would have hoped.
This hasn’t stopped Tsipras from using the report as a platform to rally the ‘no’ vote, calling it a ‘great vindication’ of Syriza’s deal aims whilst backing a 30% debt haircut alongside the IMF’s own suggested 20-year grace period. Yet all today has done is remind investors that the Eurozone remains a hub of discord, pushing the region’s indices into the red after they had held onto their flatness for much of the morning.
Worsening declines for its commodity stocks, and increasingly bearish trading in the Eurozone, dragged the FTSE into the mud this afternoon. Its fate will remain entwined with the Eurozone’s in the aftermath of the referendum at the start of next week, but could see it set off on its own path, however briefly, when George Osborne reveals his summer Budget next Wednesday.
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