Greek drama overshadows prime minister's EU discussions
The prime minister David Cameron has been doing the rounds in Europe today. This is ahead of tonight’s discussions on amendments to the EU terms – how focused any of his counterparts could have been on the matter is debatable. The will-they-won’t-they Grexit debate surrounding Greece is doing an excellent job of ensuring that any possible benefits from a €60 billion monthly QE scheme are being greatly negated. It seems that equity markets have become frozen in the headlights of this oncoming runaway train.
It might appear farcical to someone unaccustomed to the ways in which Europe has behaved in the aftermath of the financial crisis – but it has been the creditors, not Greece, who appear most eager to drive things forward. The speed with which the creditors brought a counter-proposal to the table highlights the fact no-one believed the Greeks were going to produce anything that would be acceptable.
Netflix shares fall lower and Nike gets ready for Q4 announcement
As amused observers from the far side of the Atlantic, US traders must be reassessing just how crazy these Europeans are. It’s not all plain sailing over in the US as FOMC members Daniel Tarullo and Jerome Powell are both due to speak at different events.
Last week saw Governor Powell strike a distinctly dovish tone and today could well see more of the same. Following the news that Carl Icahn has crystallised a sizeable profit in Netflix ahead of the company’s stock split knocked the shares lower. How long this negativity will surround the online content provider is debatable.
Nike, slightly out of sync with the majority of US firms, is due to post its fourth-quarter figures after the close today. These figures might have come too quickly on the back of the FIFA scandal to be reflected, but it will be interesting to see if Nike make any reference to it in its comments.
Eurozone uncertainity wreaks havoc on commodities
Gold’s inability to capitalise on the chaos that the eurozone uncertainty has caused must be worrying for gold bugs. On the occasions that the precious metal has tested the waters below $1170 the buyers have come back in. Commodity traders will be closely monitoring to see if this happens again.
Yesterday’s weak oil inventories has done little to bolster the price of oil in the markets as the worries of cooling growth in a number of economic regions in the West prevents too much enthusiasm on the long side.
Grexit affects FX markets
Uncertainty hangs over the currency markets as the lateral move in EUR/USD continues to hold in place. An inability to judge whether or not Greece will stay in the eurozone is one thing, but judging if that would be a good or a bad thing is something else altogether. Compounding the difficulty in judging the implications for EUR/USD is the fact that the goal posts keep moving as far as negotiations between Greece and her creditors are concerned.
Initially the general consensus was that today was the deadline for a decision, but this now looks to have moved to Sunday. Considering the fundamentals that Greece doesn’t want to leave, and Germany and other founding members don’t really want to force it out, you would have thought that a compromise could have been found. That, of course, would be too much like common sense for an organisation like the eurozone.