Spreadex Market Update
Magnitude of Greek deal to-do list drags on markets, whilst USA prepares for earnings season
Lack of news from the ECOFIN meeting (beyond Osborne’s anger at the idea of ESM money being used for a Greek finance bridge), a mixture of responses from Greek PMs and disappointing ZEW economic figures for both Germany and the region as a whole left the Eurozone indices in the red as the morning went on. Only mildly, mind you, and of course there is still plenty of news left to come to either widen the region’s declines or lift it back into the green. For now, however, the DAX, CAC et al. are all giving back some of Monday’s post-deal gains.
Mark Carney, speaking in front of the Treasury Committee, captured the tone of Europe this morning, stating that there are 'big execution risks' involved in this Greek deal and that ‘Herculean efforts’ were required. Beyond Greece, despite UK inflation slipping back to 0.0% for June, Carney claimed an interest rate is ‘moving closer’. Regardless, none of this helped the FTSE shake its current lifelessness, something no doubt exacerbated by the drag of Brent Crude following the confirmation of an Iran nuclear deal.
With the Iran situation coming to a positive conclusion, Greece in theory on the right track, and the (sort of) return of Chinese market stability, the global issues preventing the Federal Reserve from raising rates are slowly disappearing. Now what remains is the domestic situation, something that will not only get a work out this afternoon with US retails sales and business inventories, but with the start of the second quarter earnings season. JPMorgan and Wells Fargo, both reporting before the bell, are the first big-hitters in a week that will also bring Goldman Sachs, Bank of America, Citigroup, Netflix, eBay and Google, among a host of other multinational companies. The impact of the dollar, a key obstacle for the Fed and the blight of the last few quarters for those aforementioned companies, will be heavily scrutinised once more, this time with the long-rumoured September lift-off date in mind.
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