Greek debt crisis sparks global selloff

Heading into the close the FTSE 100 is down 155 points, at 6239, as the Greek debt crisis has gripped the market.

City of London
Source: Bloomberg

Greek debt weighs on eurozone

You can run but you can’t hide from the bond markets. The spike in the Greek 10-year yield and the sudden collapse in the equity markets seems all too familiar, and it looks like we are entering another phase of the eurozone debt crisis. The European markets are bearing the brunt of the Greek inspired selloff but the London market is being dragged lower by association. When the bond traders sink their teeth into a country they don’t let go; the panic surrounding the eurozone isn’t going away time soon.

Shire is still leading the FTSE 100 lower after AbbVie pulled its bid for the Dublin-based pharmaceutical company. Shire lost a quarter of its share price after Irish politicians pledged to  close the ‘double Irish’ tax loophole.

US markets hit by panic selling

In the US, the Dow Jones is down 192 points at 16,122. The double whammy of dreadful retail sales and empire state manufacturing from the US triggered a wave of panic selling.

There has been a swift exodus out of the equity market and into government bonds, with the US 10-year yield dropping below 2%. Trade retractions on Russia, a stagnating eurozone and political uncertainty in the Far East have all played their role in weakening the US economy.

Copper continues to fall

Copper is continuing to crumble as Chinese inflation data points squarely in the direction of an economy that is slowing down. Beijing will reveal growth figures next week and traders are already expecting the 7.5% target to be undershot.

Gold has been the destination of choice for money escaping the equity market, and it will take all the gains it can get after the past few months, but it has underperformed considering the collapse in global stock markets.

EUR/USD gains ground

Every dog has its day and that is today for EUR/USD. The single currency has made fast work of gaining ground versus the greenback after the disastrous manufacturing figures from the US.

Any suggestion that the Federal Reserve is looking to raise interest rates has been dashed. cSterling was already in good stead but looks healthier still, with the UK unemployment rate announced as having declined to 6%, a six-year low. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.