Spreadex Market Update
Bundestag backs third bailout; US inflation data set to dominate afternoon discourse
With 454 ‘yes’ votes, 113 dissenters and 18 abstainers the Bundestag passed the third Greek bailout, seeing the deal clear the final major hurdle just in time for Greece’s ECB repayment tomorrow. The pre-vote debate contained a few titbits of note, namely Wolfgang Schauble once again ruling out a write-off of Greek debt, something that could cause friction between the German finance minister and the IMF when debt relief talks begin, likely sometime in October. Now all that is left is a successful Dutch vote later today, and a Eurogroup sign-off this evening, and Greece can expect the first €26 billion tranche of its €86 billion package to arrive very soon. The news helped mitigate the more excess losses the DAX and CAC had been posting during the morning’s trading, even if both remain firmly in the red.
Copper soon abandoned its early gains, instead gradually approaching the $2.67, 6 and a half year low it hit on Tuesday. This caused Lonmin to sink to a near 10% loss, with Rio Tinto and Anglo American posting their own hefty declines; KAZ Minerals, however, was up nearly 10% ahead of its half year results tomorrow. Brent Crude, meanwhile, managed to hold onto its morning growth; not that it did the commodity much good as it struggled to break $49 per barrel, leaving the FTSE’s oil stocks in their perpetually pallid position. Of course, all of this spelled a disastrous morning for the FTSE, which continued to sit at its 6 week lows with little on the cards this week to help the index out of the gutter.
Now that the Bundestag bailout discussion is out of the way, the road is clear for this afternoon’s US inflation data to dominate the financial discourse. With both CPI and core CPI expected at 0.2% month-on-month, today’s inflation data isn’t expected to be the lift-off guaranteeing news it could have been given the proximity of the September FOMC meeting. However, the UK posted a mild surprise with its own figures yesterday, and if the US manages the same trick the Dow Jones could see its losses widen as the day goes on.
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