Spreadex Market Update
Third Greek bailout almost sewn up; China devalues yuan, move weighs on commodities
With ‘two or three small issues’ left to hash out after another Eurozone all-nighter, the expectation now is that this latest package should be signed, sealed and delivered by Friday, with the Greek government expected to ratify the deal on Wednesday or Thursday before the rest of the region’s finance ministers have their say at the end of the week. Whilst this would in theory bring with it the end of this ugly, and painfully revealing, period for Greece and the Eurozone alike, for Alexis Tsipras it provides another stick to be beaten with ahead of his reportedly planned autumn elections.
Frustratingly for the DAX and CAC, this news failed to buoy investors, with actions in China taking the focus away from the positive end to the Greek saga; the region’s ZEW economic sentiments later this morning could provide some respite, but if the successful resolution of the Greek nightmare couldn’t inspire any growth, it will take some pretty spectacular figures to change investors’ minds.
The FTSE once again failed to escape the weight of its oil and mining stocks this Tuesday morning, with the decision by China to devalue the yuan taking its toll on the commodities as a whole. The Chinese government allowed its currency to fall to 3 year lows against the dollar this morning, with an overall 2% decline in value, in a ‘one off depreciation’ designed to combat the news from the start of the week that exports had seen their biggest fall in 4 months. It continues China’s ‘see what sticks’ approach to fixing its economic woes, and failed to help the already choppy situation in the commodity sector. It’s a move that will also incense the US, which has already accused China of manipulating its currency lower in the past.
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