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Greek woes weigh on European markets

In mid-morning trading the FTSE 100 is down 37 points at 6510, as grumblings out of Greece shake European stock markets. 

Greek flag
Source: Bloomberg

Equity markets are scared of the political events unfolding in Greece, and the discussion of the country exiting the euro is back in the fold. The anti-austerity Syriza party is still leading in the polls, and this could mark the beginning of the end of Greece’s relationship with the single currency. Angela Merkel is coming to terms with the possibility of Greece exiting the euro. During the eurozone debt crisis any talk of a ‘Grexit’ would have sent tremors through the stock markets, but a controlled and well-managed withdrawal may result in relatively small losses.

Ryanair is the new nice guy of the skies and the remarkable change to its image has seen customers flocking to the airline. Shares in the Irish air carrier exceeded £10 after the December figures showed seat occupancy had risen to 88% during the month. When you look at Ryanair’s performance recently the profit warnings of 2013 seem a million miles away, and the new Business Plus service will certainly capture a sizeable portion of the corporate market.

Figures from John Lewis failed to instil confidence in the wider retail sector as traders await updates from Sainsbury’s, Tesco, WM Morrison and Marks & Spencer this week. Online shopping increased by nearly one-third at John Lewis, but the over-dependence on Black Friday sales underlines how entrenched UK retailers are becoming with the price war. Offering deep discounts is all too common in the British retail sector, but the real winner is the consumer and not the shareholder.

We are expecting the Dow Jones to open 62 points lower at 17,700, as Greek woes have pushed US index futures into negative territory, but the jobs report at the end of the week could entice the bulls back into the market. 

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