Spreadex Market Update
Tusk calls for debt sustainability proposal from creditors, Eurozone gains open up
Reports have circulated this morning that the latest Greek plan could contain €12 billion in tax rises and cuts. Whilst this will be music to creditors’ ears, or it will if relationships haven’t been soured too much, this level of reform is more than the amount the Greek public rejected by voting ‘no’ in last weekend’s referendum. Tsipras remains stuck between the creditor rock and the Syriza/Greek public hard place, and if the €12 billion reform plan reports are true it’s going to be a tough sell back at home, to put it mildly.
Things might be eased, however, if the growing calls for debt relief are heard by those (Germany) who are so opposed to them. Donald Tusk joined Christine Lagarde and Jack Lew in stating that negotiations do not go one way, and that if Greece’s proposal is sufficient it has to be matched by an ‘equally realistic’ proposal by the creditor cabal on debt sustainability. Rumours of a French helping hand in drawing up these proposals also suggest that the Eurozone, or at least certain members of the region, remain committed to avoiding a Grexit, with Irish finance minister claiming that there is more than a 50% chance of a deal being made.
With the Eurozone indices enjoying a robust morning, the FTSE followed suit, aided by the continued stability in the commodity sector. Whilst its oil and mining stocks aren’t completely in the green, with Shell and Vedanta Resources posting losses, the overall improvement in the area is helping the FTSE push away from the return to 5 month lows the index saw on Wednesday.
The US markets had a bit of a weird one on Wednesday. ‘Major technical issues’ meant that, rather astonishingly, the New York Stock Exchange had to suspend trading for over 3 hours yesterday, causing more than a few jitters when normal service resumed. Elsewhere, the latest Fed meeting minutes revealed a dovish tone arising from the ever-present fears over Greece, a Dow boosting comment that was wasted due to the effects of the NYSE shutdown. This afternoon brings with it the latest jobless claims, as usual, alongside a speech on regulatory reform from FOMC member Brainard later today.
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