Spreadex Market Update
Eurozone boosted by Eurogroup bailout agreement, Bundestag vote on Wednesday
The biggest news occurred last Friday, with the Eurogroup reaching an agreement over a third Greek bailout. The deal consists of a 3 year, €86 billion package with the first slab (worth €26 billion) supposedly arriving this week, just in time for Greece’s ECB repayment on Thursday. Wolfgang Schauble seemingly didn’t mount as robust an opposition as was expected when the finance ministers met in Brussels; a Bundestag vote on the bailout, however, could still provide an obstacle on Wednesday, though perhaps more for Merkel than Greece.
Like Tsipras’ issues within Syriza, the biggest concern for Merkel could be further rebellion from her Christian Democratic Union (and sister party Christian Social Union), with reports suggesting up to 65 dissenters. One of the key problems for the CDU is the lack of IMF support for the deal; the Washington-based institution is unlikely to come on board until after debt relief talks in October, and then only if those talks are successful. For now, however, the Eurozone markets have been buoyed by the news, with the DAX and CAC both climbing around 1% after the bell.
It’s a pretty empty Monday for the FTSE, with investors having to wait until Tuesday’s inflation figures for any UK-specific market-moving news. However, the commodities are looking as precarious as ever, and whilst the FTSE’s oil and mining stocks are currently in the green the dismal state of Brent Crude and copper suggests that sooner rather than later the UK index could give up its nascent gains and resume the losses it incurred last week.
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