Spreadex Market Update
Eurozone remains fractured whilst US sees weak retail figures
The Eurozone saw its usual mishmash of news this Tuesday, with the focus largely on how to fund a Greek finance bridge. Despite reports coming out of today’s ECOFIN meeting that George Osborne and Wolfgang Schauble, as well as the finance ministers of Denmark and Sweden, were against using the EFSM to finance Greece’s impending ECB repayments, the latest rumours are that the European Commission is still going to go ahead with recommending that the European Financial Stabilisation Mechanism be used.
Then there was a rather damning leaked report from the IMF that, among other bearish elements, suggested that Greece’s debt relief needs are much greater than first thought; in fact, the country’s debt to GDP ratio could hit 200% within the next 2 years. Add the cherry on top that certain factions of the Bundestag have accused Merkel and Schauble of ‘blackmailing’ Athens with this latest deal, something that doesn’t bode well for Friday’s parliamentary vote, and Europe remains as fractured as ever. It is perhaps this wave of less-than-positive news that has left the Eurozone indices fairly meek as Tuesday continued.
The FTSE couldn’t shake its own lifelessness this Tuesday, despite the easing of losses for Brent Crude as the day went on. The flat inflation figure failed to spark much excitement; it falls to the latest jobs data tomorrow to try and inspire some non-Greece movements in the UK index.
The US had its own disappointing afternoon; well, disappointing dependant on how much you want an interest rate raise from the Fed. After signs were pointing towards s September lift-off, severe misses in the latest retail sales figures suggests that the country’s second quarter recovery may not be as big as hoped. This was obviously bad news for the rate-hike seeking dollar, but the Dow Jones failed to capitalise on this moment of greenback weakness, even with the added bonus of the successful negotiations with Iran. A bit more clarity on the Fed’s position should arise in the next 2 days, as Janet Yellen testifies in front of the House Financial Services Committee and the Senate Banking Committee.
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