Dollar strength, Greek stalemate and oil declines all weigh on markets

A mixture of strength in the dollar, uncertainty in the Eurozone and widening losses for oil conspired against the global indices this Tuesday afternoon.

Better than expected durable goods orders, strong consumer confidence and robust new home sales all added to the greenback’s gains as the day went on, with investors’ attention to detail in regards to the strengths and weaknesses of US data sharpened after Janet Yellen’s comments last Friday. This boost to the dollar was the to the Dow’s detriment, which fell to its lowest level in nearly two weeks on the usual fears of a rate hike. The US markets could suffer more losses when noted hawk Richard Fisher speaks this evening; despite stepping down from the central bank in March, the words of the head of the Dallas Federal Reserve should still hold some sway over the markets.

After a relatively calm, overall positive, performance last week, the Eurozone’s trademark volatility roared back with a vengeance, as the DAX sank to around 1.5% in losses as the situation surrounding Greece became more and more dangerous. Despite Varoufakis claiming that Greece will meet its IMF repayments because a deal will be in place then, a meeting in Brussels between Greece and its creditors was reportedly ‘postponed’ this afternoon. Whilst some denied the meeting was delayed, the signs are piling up that all is not well (if it ever was) between each side of this debt debate.

There are now rumours that Greece, in an incredibly risky move, could bundle together all of its June IMF repayments into one lump sum kicked to the end of the month; this is either a sign of confidence from Greece that a deal can be made, or a final Hail Mary designed to force its creditors’ hand. Yet with an unnamed source claiming that progress remains painfully slow, and that no deal will be reached by this Thursday, the date of the latest teleconference between the region’s deputy finance ministers, the growing concern over the chances of a Greek default continues to severely harm the Eurozone.

With both the US and Eurozone indices falling, the FTSE couldn’t help but join in as declines for both its oil and mining stocks, including Tullow Oil, BP, Vedanta Resources and Rio Tinto, weighed on the UK index. The FTSE looks like it has another quiet day on the cards on Wednesday, and with the Greece situation in the Eurozone unlikely to disappear, it might be a tough week for the UK index going forward.